--------------------------------------------------------------------------------
                                      1996

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    Form 10-K
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[x]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 For the fiscal year ended December 31, 1996.

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934 For the transition period from _______ to _______.

                        Commission File Number 001-04710

                               WHITMAN CORPORATION

             (Exact name of registrant as specified in its charter)

          Delaware                                        36-6076573
------------------------------------     ---------------------------------------
  (State or other jurisdiction of        (I.R.S. Employer Identification Number)
   incorporation or organization)

3501 Algonquin Road, Rolling Meadows, Illinois               60008
----------------------------------------------          --------------
  (Address of principal executive offices)                (Zip Code)

        Registrant's telephone number, including area code (847) 818-5000
          Securities registered pursuant to Section 12(b) of the Act:


     Title of each class             Name of each exchange on which registered
-------------------------------    ---------------------------------------------
Common Stock, without par value                 New York Stock Exchange
                                                 Chicago Stock Exchange
                                                  Pacific Stock Exchange
Preferred Share Purchase Rights                 New York Stock Exchange
                                                 Chicago Stock Exchange
                                                  Pacific Stock Exchange

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during the  preceding  12 months and (2) has been  subject to such  filing
requirements for the past 90 days. Yes [x] No [ ]
     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
     As of February 28, 1997,  the  aggregate  market value of the  registrant's
common stock held by non-affiliates  was $2,399.2 million.  The number of shares
of common stock outstanding at that date was 102,092,432 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                                           Part       Item
                                                          -----    ----------
1.   Whitman Corporation definitive proxy statement
     dated March 20, 1997 for the 1997 Annual
     Meeting of Shareholders.                              III     10, 11, 12
--------------------------------------------------------------------------------



<PAGE>
                                     PART I
Item 1.   BUSINESS.
                                    GENERAL

     Whitman  Corporation  ("Whitman") is engaged in three distinct  businesses:
the production and distribution of Pepsi-Cola and other  non-alcoholic  beverage
products by Pepsi-Cola  General  Bottlers,  Inc. ("Pepsi  General");  automotive
services  offered  by  Midas  International   Corporation  ("Midas");   and  the
production,  sale and  servicing  of  refrigeration  systems  and  equipment  by
Hussmann Corporation ("Hussmann").
     This  Form  10-K   contains   forward-looking   statements   which  reflect
management's  expectations  and are based on  currently  available  information.
Actual results or other information may vary  significantly from such statements
and are  subject to future  events and  uncertainties,  including,  among  other
factors,  weather,  economic and market  conditions,  exchange  rates,  cost and
availability  of  raw  materials,   competitive  activities  or  other  business
conditions.
                                  PEPSI GENERAL

     Pepsi  General  produces  and  distributes  soft  drinks and  non-alcoholic
beverages,  under exclusive  franchises,  in 12 Midwestern  states - a market of
approximately 25 million people. It is the largest  independent Pepsi bottler in
the U.S., accounting for about 12 percent of all Pepsi-Cola products sold in the
U.S. and outsells all other brands in its combined U.S. franchise territory.  In
1994, Pepsi General became an international  company when it began operations in
a newly franchised area of northern and western Poland.  This market, when fully
developed, will serve approximately 16 million people.
     In 1996,  approximately  88 percent of Pepsi General's  domestic volume was
from Pepsi-Cola  products,  including:  Pepsi, Diet Pepsi,  Caffeine Free Pepsi,
Caffeine Free Diet Pepsi,  Wild Cherry Pepsi,  Diet Wild Cherry Pepsi,  Mountain
Dew,  Diet Mountain Dew,  Caffeine Free Mountain Dew,  Slice,  Mug Root Beer and
All-Sport.  Other soft drink brands,  including Dr Pepper,  Seven- Up,  Hawaiian
Punch, Canada Dry, Seagram's mixers,  Ocean Spray and Lipton Tea account for the
remaining 12 percent. Diet products account for slightly more than 26 percent of
total cases sold. Approximately three-quarters of all cases sold are in cans and
one-quarter are in non-returnable bottles.
     Volume  growth in the soft drink  industry has  historically  come from the
supermarket  sector,  where  competition is intense.  Recently,  Pepsi General's
focus has been to obtain  more of its growth  from  higher  margin  distribution
channels such as convenience  stores,  gas stations,  vending  machines and food
service providers.
     The majority of Pepsi  General's  products are  distributed  by route sales
people to retail outlets by truck.  Currently,  Pepsi General operates more than
1,300 routes  domestically  and 160 routes in Poland.  For several years,  Pepsi
General has been expanding its bulk  distribution  system for larger  customers,
Pepsi Express, in efforts to improve delivery productivity.  In Poland, now that
the initial market  penetration has been completed,  Pepsi General has begun the
process of improving the efficiency of its delivery system by consolidating some
routes and installing a presold  delivery system in others.  In addition,  Pepsi
General has  pioneered  the use of hand-held  computers  for route sales people.
This system enables Pepsi General to process sales and orders more  efficiently,
allows for better inventory and discount  controls,  and enables sales personnel
to handle a wider range of products more efficiently.
     Pepsi General owns the majority of vending machines which dispense its soft
drink products in factories,  offices,  schools,  stores,  gasoline stations and
other  locations.  Pepsi General's  business is seasonal and weather  conditions
have a significant effect on sales.
     One of Pepsi General's  long-term  strategic  goals is to transform  itself
from a carbonated  soft drink  company to a total  beverage  company and to grow
faster than the industry. In 1996, Pepsi General continued to expand its product
line by adding  several  new  flavors  to its  Ocean  Spray  juice  line and the
All-Sport  isotonic drink line.  Pepsi General also replaced its other root beer
product  lines with Mug Root  Beer,  increasing  root beer sales by 27  percent.
Pepsi General also distributed a bottled spring water in all of its markets.
     Pepsi General's franchises grant it the exclusive right to produce and sell
the products and use the related trade names and  trademarks  in the  franchised
territories.  The  franchises  require Pepsi  General,  among other  things,  to
purchase its  concentrate  requirements  solely from the  franchisor,  at prices
established  by  the  franchisor,   and  to  promote  diligently  the  sale  and
distribution  of  the  franchised  products.  Domestic  franchises  are  for  an
indefinite  term and are subject to termination  upon failure to comply with the
provisions of the franchise agreement.
     Competition  among  soft  drinks  of all  kinds,  and  particularly  in the
principal cola drink market (approximately 60 percent of all soft drinks sold in
the U.S.  are  colas),  is  intense  and  focuses  on price to  retail  outlets.
Packaging  materials (bottles,  bottle caps, cans, cartons,  cases) are obtained
from  manufacturers  approved by the franchisor and other items are purchased in
the general market.  The inability of suppliers to deliver  concentrate or other
products  to  Pepsi   General   could   adversely   affect   operating   results
significantly.  However, despite fluctuations in the price of high fructose corn
sweetener  and  materials  used in soft drink  packaging,  Pepsi General has not
experienced difficulty in obtaining such items.
     As the result of an agreement  entered into in 1987,  Pepsi  General is 80%
owned by Whitman and 20% owned by a  subsidiary  of PepsiCo,  Inc.  ("PepsiCo"),
which is the franchisor of Pepsi-Cola products.  While Pepsi General manages all
phases of its operations,  including pricing of its products,  PepsiCo and Pepsi
General exchange production, marketing, and distribution information.
     At year-end 1996, Pepsi General acquired the assets of the St.  Petersburg,
Russia  franchise  from  PepsiCo,  which  permits  Pepsi  General to produce and
distribute  Pepsi-Cola  products  in that  city,  as well as in  other  parts of
northern Russia, including Kaliningrad. The Company also acquired franchises for
Belarus and the Baltic countries of Estonia, Lithuania and Latvia.
     By the end of 1996,  the Company had  invested  over $125 million in Poland
and it is expected that additional  investments in Poland,  Russia,  Belarus and
the Baltics may exceed another $100 million over the next 3 years.
     The  Company  has  experienced   operating  losses  each  year  in  Poland,
increasing  from $11.3 million in 1995 to $12.1  million in 1996.  Pepsi General
expects  to  continue  to have  operating  losses in Poland  for the next 2 or 3
years,  but at levels  below those  incurred  in 1996.  Pepsi  General  expects,
however,  that with  start-up  costs to be incurred  in Russia and the  Baltics,
total operating losses in 1997 in its  international  operations will exceed the
losses incurred in Poland in 1996.

                                      MIDAS

     Midas provides  automotive  exhaust,  brake and suspension services through
more than 2,600 franchised and  company-owned  Midas shops in the United States,
Canada, France, Belgium,  Austria,  Switzerland,  Spain, Italy,  Australia,  New
Zealand, Taiwan, Panama, Mexico, Honduras, El Salvador,  Brazil and the Bahamas.
Domestic  manufacturing  plants produce  approximately  2,000 different types of
mufflers  and 3,200  types of exhaust  and tail  pipes to service  approximately
1,200 makes and models of automobiles.
     The  principal  source of Midas'  revenue  is derived  from its  network of
franchised  and  company-owned  and operated  retail  shops.  Midas  collects an
initial  franchise fee and receives yearly royalties based upon the franchisee's
gross  revenues.  In addition,  Midas  generates  revenues  from the sale of its
manufactured  mufflers  and tubing;  the resale of  purchased  parts,  primarily
brakes, shocks and front-end alignment components to its franchisees; and rental
real estate revenues from franchisees  related to the leasing of Midas shops. An
important part of Midas' marketing program is its warranty of mufflers,  brakes,
and shocks.  Midas also sells its manufactured  exhaust system parts under other
brand names to automotive parts distributors,  jobbers and automotive  accessory
stores  and  its  fabricated  tube  bending  equipment  to  jobbers  and  retail
installers.
     The raw materials and supplies  used in Midas  products are purchased  from
many  suppliers and the company is not dependent  upon any single source for any
of its raw materials or supplies.
     Competition  in the automotive  replacement  parts business is intensive at
both the  wholesale  and  retail  levels.  Service  and  convenience,  price and
warranties are the primary competitive factors.  Competition includes automotive
service centers of the retail chain stores,  muffler shops,  automotive dealers,
gasoline stations and independent repair shops.

                                    HUSSMANN

     Hussmann  produces,  sells and  services  merchandising  and  refrigeration
systems for the world's food industry.  Products  include  refrigerated  display
cases,  commercial/industrial  refrigeration  systems,  storage coolers,  bottle
coolers,  walk-in coolers, and heating,  ventilating and air conditioning (HVAC)
equipment.  Hussmann is the market leader in North America,  Mexico and the U.K.
The supermarket  refrigerated  display equipment  industry in the United States,
Hussmann's core business,  represents an $800 million market.  The United States
customer base is comprised of approximately 13,000 independent and 18,000 chain-
owned  supermarkets,   plus  over  52,000  other  grocery  stores.  Every  year,
approximately 4,000 stores purchase refrigeration equipment for either new store
openings or remodelings.  Historically, Hussmann's supermarket business has been
divided  approximately  equally between new store activity and the remodeling of
existing  stores.  In 1996,  about 44 percent of such  business was in new store
openings, and 56 percent remodelings.
     The convenience store ("C-store")/specialty  equipment industry in the U.S.
represents a market of over $300 million per year. This industry,  once aimed at
the  stand-alone  C-store,  has grown  first into  convenience  marts  owned and
operated by the large oil companies,  and later into food service  installations
such as Boston Market and Kenny Rogers.
     North American  commercial/industrial  refrigeration represents a market of
nearly $500 million.  Hussmann's  operations in the U.S. and Canada  manufacture
unit coolers for walk-in coolers and freezers,  condensing units, and air-cooled
condenser products for this market.
     In  Mexico,  Hussmann  has two  manufacturing  operations,  and uses both a
direct sales force and a network of 150 independent  dealers and distributors to
bring its products to the Mexican market. A large portion of Hussmann's business
in Mexico is in  equipment  for the soft drink and  brewery  industries.  During
1995, Hussmann expanded its operations in South America with an acquisition of a
75 percent interest in a small manufacturer in Chile. In January, 1997, Hussmann
acquired  a  70  percent   interest   in  a  Brazilian   supermarket   equipment
manufacturer. Hussmann's Canadian operations consist of two manufacturing plants
and a network of company-owned branches and independent distributors.
     In the United Kingdom,  Hussmann has two manufacturing plants and a network
of sales,  service,  and  installation  depots  located  throughout the country.
Hussmann's  branch  service and  distribution  network in the United  Kingdom is
believed to be at least twice the size of its nearest competitor.
     In the  Far  East,  Hussmann  has a joint  venture  with a  distributor  in
Singapore which sells,  services,  and distributes  Hussmann products throughout
Asia.  Hussmann  also has a 55 percent  interest  in the  Luoyang  Refrigeration
Machinery  Factory,  China's leading producer of refrigeration  systems and food
display  cases.  Hussmann  commenced  operations  in a new factory in Luoyang in
1996,  and  began to  produce  Hussmann  designed  products.  Hussmann  also has
distributor agreements in Taiwan, New Zealand,  Korea,  Argentina,  Columbia, El
Salvador and Costa Rica and licensees in Thailand and New Zealand.
     One of Hussmann's strengths is its research and development ("R&D") center,
where  the  PROTOCOL(TM)   system,  a  unique   refrigeration  system  which  is
chloroflourocarbon  (CFC)  and  hydrochloroflourocarbon  (HCFC)  free  and  less
expensive to install and operate than conventional systems, was developed. It is
the only R&D  center of its kind in the  industry.  It allows  Hussmann  to work
closely with chemical companies and compressor, valve and controls manufacturers
to create new generations of cases and systems.
     The dollar  amount of firm backlog at December  31, 1996 was $168  million,
compared with $173 million at December 31, 1995.  Substantially all such backlog
is expected to be shipped within one year.
     Hussmann  products  are  marketed  internationally  by both  company  sales
personnel and independent distributors. The principal competitive factors in the
sale  of  Hussmann  products  are  price,   variety,   quality  and  technology,
particularly  energy  conservation.  The  raw  materials  and  supplies  used in
Hussmann  products  are  purchased  from  many  suppliers  and  Hussmann  is not
dependent upon any single source for any of its raw materials or supplies.

                                    EMPLOYEES

     Whitman employed 17,594 persons worldwide as of December 31, 1996.  Whitman
regards its employee relations as generally satisfactory.

                              ENVIRONMENTAL MATTERS

     Whitman  maintains  a  continuous  program to  facilitate  compliance  with
federal,  state and local laws and  regulations  relating  to the  discharge  or
emission  of  materials  into,  and other laws and  regulations  relating to the
protection of, the environment. The capital costs of such compliance,  including
the costs of the  modification  of existing  plants and the  installation of new
manufacturing  processes  incorporating  pollution control  technology,  are not
material.
     Hussmann,  together with  numerous  other  defendants,  has been named as a
potentially  responsible party ("PRP") in two state actions under the provisions
of the Comprehensive  Environmental Response,  Compensation and Liability Act of
1980 ("CERCLA") involving off-site waste disposal.  Hussmann is also involved in
several  other,  principally  off-site,  proceedings.  None of these  matters is
expected to involve any significant  expense to Hussmann.  Pepsi General is a de
minimus participant at six off-site locations. Midas has been named a PRP at one
Superfund site where its  participation is also expected to be at the de minimus
level, and is also involved in certain removal and remedial  activities relating
to underground  storage tanks which are not anticipated to result in significant
expense to Midas.
     Under the agreement  pursuant to which Whitman sold Pneumo Abex Corporation
in 1988 and a subsequent  settlement  agreement entered into with Pneumo Abex in
September,  1991,  Whitman has assumed  indemnification  obligations for certain
environmental  liabilities  of Pneumo  Abex,  net of any  insurance  recoveries.
Pneumo  Abex has been and is  subject  to a number of  federal,  state and local
environmental  cleanup  proceedings,   including  proceedings  under  CERCLA  at
off-site locations involving other major corporations which have also been named
as PRP's. Pneumo Abex also has been and is subject to private claims and several
lawsuits for remediation of properties  currently or previously  owned by Pneumo
Abex, and Whitman is subject to two such suits.
     There is significant uncertainty in assessing the total cost of remediating
a given site and in determining any individual  party's share in that cost. This
is due to the fact that the Pneumo Abex  liabilities are at different  stages in
terms of their ultimate  resolution,  and any assessment and  determination  are
inherently  speculative  during  the early  stages,  depending  upon a number of
variables  beyond the  control of any party.  Additionally,  the  settlement  of
governmental  proceedings or private claims for remediation  invariably involves
negotiations  within  broad cost  ranges of possible  remediation  alternatives.
Furthermore,  there are significant  timing  considerations in that a portion of
the expense involved and any resulting obligation of Whitman to indemnify Pneumo
Abex may not be incurred for a number of years.
     In 1992, the United States Environmental Protection Agency ("EPA") issued a
Record of Decision  ("ROD")  under the  provisions  of CERCLA  setting forth the
scope of  expected  remedial  action at a Pneumo Abex  facility  in  Portsmouth,
Virginia.  The EPA has estimated that the cost of the remedial action  necessary
to comply  with an  Amended  ROD,  issued in 1994,  will total $31  million.  In
January,  1996,  Pneumo Abex executed a Consent  Decree with the EPA agreeing to
implement  remediation of areas associated with the former  Portsmouth  facility
operations.  Whitman management is optimistic that the cost of implementation of
the remedy  required by the Consent  Decree will be less than the estimated cost
set forth in the Amended ROD.  Additionally,  in a lawsuit brought against other
PRPs which did not  execute  the Consent  Decree,  Pneumo Abex and Whitman  have
recovered  approximately  $3.1  million  in  settlements  and  have  obtained  a
judgment, subject to appeal, against other financially viable PRPs for more than
40% of the past and future response costs at the Portsmouth site.
     Management  believes  that  potential  insurance  recoveries  may  defray a
portion  of  the  expenses   involved  in  meeting  Pneumo  Abex   environmental
liabilities.   In  November,  1992,  Jensen-Kelly  Corporation,  a  Pneumo  Abex
subsidiary,  Pneumo Abex and certain  other of its  affiliates,  and Whitman and
certain of its affiliates,  filed a lawsuit against numerous insurance companies
in the Superior Court of California,  Los Angeles  County,  seeking  damages and
declaratory  relief for insurance  coverage and defense costs for  environmental
claims.  In 1996,  Whitman and Pneumo Abex  achieved  settlements  with  several
carriers, and although optimistic it will receive additional recoveries, Whitman
is otherwise unable to predict the outcome of this litigation.
     In the opinion of management, Whitman believes that the eventual resolution
of these claims and  litigation,  considering  amounts  accrued,  but  excluding
potential  insurance  recoveries,  will not have a  material  adverse  effect on
Whitman's financial condition or the results of operations.

Item 2.   PROPERTIES.

     Pepsi General's facilities include  five bottling plants,  four combination
bottling/canning  plants,  four canning plants and 69  distribution  facilities,
including eleven distribution  facilities in Poland.  Eleven of the distribution
facilities are leased and approximately 13 percent of Pepsi General's production
is from its one leased plant.  Midas operates four  manufacturing  plants in the
United States,  of which three are owned and one is leased.  In addition,  Midas
maintains 13 warehouses in the United States and five  warehouses in Canada,  of
which two are owned and 16 are leased.  At December 31, 1996, Midas operated 139
Midas Muffler Shops in the United  States,  32 Midas Muffler Shops in Canada and
209 Midas  Muffler Shops in seven other  foreign  countries.  As of December 31,
1996, Hussmann operated 12 owned and nine leased manufacturing facilities in the
United States,  Canada,  Mexico, China, Chile and the United Kingdom.  There are
two owned and 42 leased branch facilities in the United States,  Canada, Mexico,
Hungary,  Peru and the United Kingdom which sell,  install and maintain Hussmann
products. 
     All  facilities  are adequately  equipped and  maintained,  and capacity is
considered to be adequate for current needs. 
     In addition,  Whitman  engages in a variety of  industrial,  commercial and
residential real estate activities in the United States.

Item 3.   LEGAL PROCEEDINGS.

     Whitman and its subsidiaries are defendants in numerous  lawsuits,  none of
which,  in the opinion of  management,  are expected to have a material  adverse
effect on Whitman's results of operations or financial condition.
     See also "Environmental Matters" in Item 1.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.

                                     PART II

Item 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The  common  stock of the  Company  is listed  and  traded on the New York,
Chicago and Pacific  stock  exchanges.  The table below sets forth the  reported
high and low sales  prices as  reported  for New York Stock  Exchange  Composite
Transactions  for Whitman  common stock and indicates the Whitman  dividends for
each quarterly period for the years 1996 and 1995.
<TABLE>
<CAPTION>
                                                        Common
                                        -------------------------------------
                                          High           Low         Dividend
                                        ---------     ---------     ---------
<S>                                     <C>           <C>           <C>
1996:
-----
1st quarter                             $ 25.000      $ 21.750      $  0.095
2nd quarter                               25.750        22.875         0.105
3rd quarter                               24.625        21.875         0.105
4th quarter                               25.125        22.375         0.105

1995:
-----
1st quarter                             $ 19.375      $ 15.625      $  0.085
2nd quarter                               19.375        17.500         0.095
3rd quarter                               21.625        18.625         0.095
4th quarter                               23.375        20.125         0.095
</TABLE>
     There were 18,223 shareholders of record at December 31, 1996.

Item 6.   SELECTED FINANCIAL DATA.

     See Index to Financial Information following signature page.


Item 7.   MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
          RESULTS OF OPERATIONS.

LIQUIDITY AND CAPITAL RESOURCES:

     The Company's  cash flow from  continuing  operations  continued  strong in
1996, increasing by $40.1 million to $233.4 million. The improvement reflected a
higher level of earnings  before  depreciation  and  amortization.  Cash used in
discontinued  operations  primarily  related to environmental  expenses,  net of
insurance recoveries, of previously sold subsidiaries.
     The Company's capital  expenditure  programs continued at a relatively high
level,  reaching a combined  total of $182.4 million  (including  investments in
joint  ventures),  compared  with $253.9  million in 1995,  which  included  the
acquisition of the Pepsi-Cola  franchise in Cedar Rapids,  Iowa. Included in the
expenditures in 1996 was $30.6 million invested in Pepsi General's joint venture
in Poland,  including a new  manufacturing  facility.  Capital  spending in 1997
(excluding  acquisitions)  currently is projected to increase slightly from 1996
levels.  Purchases and sales of investments  principally relate to the Company's
insurance  subsidiary,  which provides certain levels of insurance for Whitman's
various  operating  companies.  Funds  provided by the  operating  companies are
invested by the insurance  subsidiary  and proceeds from sales are often used by
the insurance company to pay claims. A substantial  portion of the purchases and
sales of such investments are reinvested as the investments mature. In 1996, the
Company liquidated $70 million of its investment portfolio to reduce its outside
indebtedness.
     In spite of spending  over $180 million on capital  investments  (including
joint ventures),  $93 million to purchase additional treasury shares, and nearly
$43 million in dividends,  the Company's total debt,  including short-term debt,
increased by only $9.8 million in 1996.  The modest  increase in debt  reflected
the Company's strong cash flow and the $70 million reduction in investments.  In
1996,  the Company  issued $128.0  million of long-term debt (see Note 4), which
was used, in part, to replace $103.1 million of debt which came due in 1996.
     At  December  31,  1996,  the Company had $300  million  available  under a
contractual  revolving  credit  facility  and $200 million  available  under its
commercial  paper  program.  No amounts were being used from either  facility at
December  31, 1996.  The Company  believes  that with its strong cash flow,  the
outlook for continued earnings improvements, its existing and available lines of
credit along with the potential for additional debt or equity offerings, it will
have sufficient resources to fund its future growth, including funds for capital
expenditures and possible acquisitions.
     The Company uses  financial  derivative  instruments to manage its interest
rate risk. A  description  of these  transactions  is discussed in Note 5 to the
Consolidated  Financial  Statements.  The  effects of such  transactions  on the
Company's results of operations and financial condition were not significant.

OPERATING RESULTS:
1996 COMPARED WITH 1995

     For a  description  of the  Company's  major  products and services and its
principal  markets,  reference is made to Part I, Item 1, Business,  and to Note
12, Segment Reporting, to the Consolidated Financial Statements.
     Sales and revenues increased by $164.8 million,  or 5.6 percent, in 1996 to
$3,111.3 million.
     Pepsi  General's  sales  increased by $52.7 million in 1996, an increase of
3.6  percent  over  1995.  Included  were  revenues  of $50.3  million  from its
operations in Poland, a 44.5 percent increase over 1995. Unit case volume (which
represented  approximately  88  percent  of total  domestic  sales)  in the U.S.
increased by 3.8 percent over 1995.  The average net selling  price on such case
volume declined slightly during 1996, reflecting competitive pricing conditions,
particularly in some of Pepsi General's major markets.
     Midas'  revenues  increased  by 4.9  percent  to  $604.2  million  in 1996.
Approximately   two-thirds  of  the  increase  came  from  Midas'  international
operations,  with  European  revenues  up nearly 20 percent,  reflecting  higher
demand due to an  increase in the number of shops from  Midas'  rapid  expansion
programs.  Canadian revenues also improved by more than six percent. Revenues in
the U.S.  increased by 2.3 percent,  resulting from an increase in the number of
Company-owned  shops  and  higher  product  sales to the  franchisees  and other
customers.
     Hussmann's  revenues rose sharply in 1996 to $1,005.7 million,  an increase
of $84.0 million, or 9.1 percent,  over 1995. The improved revenues  principally
were from their North American  operations,  where revenues increased by over 12
percent to approximately $800 million, reflecting an increase in industry demand
for supermarket equipment and strong acceptance of Hussmann's new Impact product
lines. Hussmann's Mexican operations revenues were up 16.2 percent, reflecting a
partial  recovery from poor economic  conditions,  as well as a strong growth in
export sales.  Offsetting these  improvements,  sales in the U.K. were adversely
affected  by  local  restrictions  on  supermarket  expansions.   The  Company's
consolidated  gross profit increased by $78.1 million,  or 7.6 percent,  to $1.1
billion.  The gross  profit  margin  improved  from 34.8 percent in 1995 to 35.5
percent  in  1996.  This  improved  margin,  in  spite  of  competitive  pricing
pressures,  reflected the benefits of lower  ingredient  and packaging  costs at
Pepsi  General,  and effective  controls over fixed  overhead costs by all three
major subsidiaries.
     Selling,  general  and  administrative  (S,G&A)  costs  increased  by $52.6
million, or 7.9 percent, compared with the 5.6 percent increase in sales, and as
a result,  S,G&A costs  increased to 23.0 percent of sales,  compared  with 22.5
percent in 1995. The higher level of expenses reflected, among other items, cost
increases which were not recovered through pricing,  and heavier promotional and
marketing efforts, particularly at Pepsi General and Midas.
     The  increase in  amortization  expense  primarily  reflected a full year's
amortization of goodwill from acquisitions made in 1995.
     Operating  income  increased  by 7.1  percent to $366.6  million,  on a 5.6
percent  increase  in sales.  Consolidated  operating  margins  improved to 11.8
percent, up from 11.6 percent in 1995.
     Pepsi General's  operating  income grew by 7.4 percent to $212.3 million in
1996.  Included  in these  results  were  operating  losses of $12.1  million in
Poland, which reflected,  among other factors, a full year of operating costs at
all facilities.  Pepsi General's  domestic  operating  results improved by $15.4
million, or 7.4 percent, to $224.4 million. The improved performance in the U.S.
reflected  the  benefits  of higher  volumes and certain  lower  ingredient  and
packaging costs, which more than offset the adverse effects of lower pricing.
     Midas'  operating  earnings  declined by $4.5 million,  or 5.5 percent,  to
$78.0 million.  U.S.  earnings declined due to relatively slow retail traffic in
Company-owned  shops,  as well as  limited  growth in  product  sales.  The U.S.
results were also affected by higher product costs,  and increased  expenses for
promotional  and other programs which are designed to generate  future  revenues
and  to  lower  distribution  costs.  Foreign  earnings  continued  to  improve,
particularly in Europe, benefiting from the strong revenue growth.
     Hussmann's earnings rebounded sharply, increasing by $15.1 million, or 19.2
percent, to $93.8 million.  The sharp improvement  reflected the benefits of the
higher  volumes in North America,  and higher  earnings in Mexico as a result of
improved product demand.  Earnings were adversely affected in the U.K., however,
where local zoning restrictions have curtailed demand.
     Interest expense and interest income did not change significantly. Included
in other expense,  net was an $8.7 million charge to Pepsi General's  operations
in Poland,  principally  relating to asset write-downs at its joint venture, and
was related to,  among  other  items,  the  discontinuation  of certain  product
packages.  Other  changes  included  net  losses on other  asset  sales in 1996,
compared  with  modest  gains in 1995.  The  amounts of such  gains and  losses,
individually or in the aggregate, were not material.  Foreign currency gains and
losses were not significant.

1995 COMPARED WITH 1994

     Sales and revenues  increased  by $287.7  million,  or 10.8%,  in 1995 to a
total of $2,946.5 million.  
     Pepsi  General's  revenues  increased  by $192.6  million  in 1995,  a 15.3
percent  increase  over 1994.  Included  were $34.8 million of revenues from the
Pepsi  General  operations  in Poland,  compared with only $0.8 million in 1994,
which  reflected the start-up of such  operations in late 1994. Unit case volume
(which represents  approximately 88 percent of total domestic sales) in the U.S.
increased by 5.6 percent over 1994, including 0.8 percent from the Cedar Rapids,
Iowa  franchise  which was purchased in July,  1995.  The remaining  increase in
domestic unit volume was  principally in the core Pepsi brands.  The average net
selling price per case  increased by  approximately  6 percent in 1995, as Pepsi
General  attempted to recover  substantial  increases  in product and  packaging
costs. 
     Midas'  revenues  increased by $32.9  million in 1995,  up 6.1 percent,  to
$576.1  million.  Approximately  two-thirds  of the  increase  came from  Midas'
European   operations,   where  approximately   one-half  of  the  increase  was
attributable  to  higher  exchange  rates.  The  higher  foreign  revenues  also
reflected an increase in the number of  company-owned  shops, as Midas continued
its shop expansion program in Europe.  U.S.  revenues  increased by 2.7 percent,
and reflected increased revenues from company-owned shops, higher product sales,
and increased royalty and rent-related revenues. 
     Hussmann's  revenues  increased  by $62.2  million in 1995,  a 7.2  percent
increase, to $921.7 million. The increase in sales was principally in Hussmann's
North American  operations,  reflecting  improved  demand for its product lines.
Included in these sales were $33.6  million of  revenues of  companies  acquired
during the year,  but this  increase  was offset by lower  revenues  (down $38.7
million) from Hussmann's Mexican  operations.  The reduction in Mexico reflected
both the devaluation of the peso and the sharp decline in the Mexican economy.
     The  Company's  gross profit  margin  declined from 35.9 percent in 1994 to
34.8 percent in 1995. This unfavorable variance was principally caused by higher
product and packaging cost  (primarily  aluminum can costs,  which  increased by
approximately 25 percent) at Pepsi General.  In addition,  Hussmann  experienced
some margin reductions,  reflecting continuing  competitive pricing pressure and
changes in sales mix. Midas' margins improved modestly.
     Selling,  general and  administrative  (S,G&A) expenses  increased by $54.3
million in 1995,  or 8.9 percent,  compared  with the 10.8  percent  increase in
sales. As a result, S,G&A expenses,  as a percentage of sales,  declined to 22.5
percent in 1995, down from 22.9 percent in 1994.  Pepsi General's and Hussmann's
S,G&A expenses grew at rates less than their  respective  revenue growth,  while
Midas' expenses grew at a faster percentage than revenues, principally in Europe
where the increase reflected,  among other items, the effects of higher exchange
rates as well as an increase in the number of company-owned shops.
     Amortization  expense increased  slightly in 1995,  principally  reflecting
goodwill associated with recent acquisitions.
     Operating  income  increased  by 4.7  percent  to $342.3  million  in 1995,
compared  with a 10.8 percent  increase in  revenues.  Operating  margins,  as a
percent of sales,  declined to 11.6  percent in 1995,  down from 12.3 percent in
1994.
     Pepsi General's  operating income amounted to $197.7 million in 1995, $12.2
million, or 6.6 percent, above 1994's performance.  Included in the results were
operating losses of $11.3 million in Poland,  principally  representing start-up
costs,  compared with operating  losses of $2.7 million in 1994. The increase in
operating  earnings  in the  U.S.  principally  reflected  the  benefits  of the
improved  volumes and higher prices.  Pepsi  General's  margins,  however,  were
affected adversely by the sharp increase in aluminum can costs.
     Midas'  operating  earnings  totaled a record $82.5  million,  and exceeded
1994's performance by $7.3 million, or 9.7 percent. The improved performance was
principally  in their U.S.  operations  and  reflected  the  benefits  of higher
product shipments, as well as higher royalty and rental revenues. Midas' foreign
operating results  increased  modestly,  reflecting  improved results in France,
Spain and Australia,  offset by additional  start-up expenses as Midas continued
to expand its company-owned shop network in Europe.
     The operating  results at Hussmann were down $3.8 million,  or 4.6 percent,
to $78.7 million in 1995.  Operating earnings in Mexico were $12.4 million below
1994,  reflecting  the  peso  devaluation  and  the  deterioration  of  economic
conditions in Mexico. Excluding Mexico, North American operating results were up
12.5 percent over 1994, reflecting the benefits of higher volumes.  Acquisitions
in China, Chile and the U.K.  contributed  approximately $2 million to operating
earnings in 1995.
     Interest expense increased by $3.5 million in 1995,  principally reflecting
higher debt levels.  Interest  income was unchanged,  as the amounts of invested
funds did not change significantly during the year.
     Other expense,  net declined from $25.2 million in 1994 to $14.4 million in
1995.  The change  primarily  related to modest gains on asset  dispositions  in
1995, compared with losses on similar  transactions in 1994. There were no gains
or losses that were individually significant.  Foreign currency gains and losses
also were not significant.

ENVIRONMENTAL MATTERS

     The Company is involved,  directly or as a possible indemnitor, in a number
of  environmental  proceedings  and claims.  The Company  continues  to actively
investigate  such  matters in an attempt to evaluate the  Company's  exposure to
each claim.  In many  instances,  many other major  corporations  also have been
identified as potentially  responsible  parties.  As discussed in Note 11 to the
Consolidated  Financial  Statements,  the  Company  believes  that  it has  made
adequate provision for such potential  liabilities,  excluding  consideration of
possible  insurance  recoveries.  However,  it is not  possible  at this time to
determine what the Company's ultimate liability on these claims may be.

Item 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     See Index to Financial Information following signature page.

Item 9.   CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
          FINANCIAL DISCLOSURE.

     None.

                                    PART III

Item 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     Whitman  incorporates  by reference  the  information  contained  under the
caption  "Election of Directors" in its definitive  proxy  statement dated March
20, 1997,  filed  pursuant to Section  14(a) of the  Securities  Exchange Act of
1934, as amended.
     The  executive  officers of Whitman and their ages as of March 1, 1997 were
as follows:

                          Age             Position
                          ---             --------

 Bruce S. Chelberg        62    Chairman and Chief Executive Officer
 Thomas L. Bindley        53    Executive Vice President
 Frank T. Westover        58    Senior Vice President-Controller
 Lawrence J. Pilon        48    Senior Vice President-Human Resources
 John R. Moore            61    Corporate Vice President; President and Chief
                                 Executive Officer, Midas International 
                                 Corporation
 J. Larry Vowell          56    Corporate Vice President; President and Chief
                                 Executive Officer, Hussmann Corporation
 Charles H. Connolly      62    Vice President-Corporate Affairs and Investor 
                                 Relations
 William B. Moore         55    Vice President, Secretary and General Counsel

     Except as  described  in the  following  paragraph  or as  incorporated  by
reference to the Registrant's  definitive proxy statement,  all of the executive
officers  of Whitman  have held  positions  which are the same or which  involve
substantially similar functions as indicated above during the past five years.
     Mr. Chelberg was elected Chairman and Chief Executive Officer in May, 1992.
Prior to that,  Mr.  Chelberg  served as Executive Vice President of the Company
since 1985. Mr.  Bindley joined Whitman  Corporation as Executive Vice President
in April,  1992.  Prior to joining  Whitman  Corporation,  Mr. Bindley served as
Executive  Vice  President of Square D  Corporation  from  August,  1986 through
September,   1991.  Mr.  Pilon  joined   Whitman   Corporation  as  Senior  Vice
President-Human   Resources  in  February,   1994.   Prior  to  joining  Whitman
Corporation, Mr. Pilon served as Vice President-Human Resources and Secretary of
National Intergroup, Inc. from June, 1986 to January, 1994.

Item 11.   EXECUTIVE COMPENSATION.

     Whitman  incorporates  by reference  the  information  contained  under the
caption  "Executive  Compensation" and the last two paragraphs under the caption
"General  Information"  in its definitive  proxy statement dated March 20, 1997,
filed  pursuant to Section  14(a) of the  Securities  Exchange  Act of 1934,  as
amended.

Item 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     Whitman  incorporates  by reference  the  information  contained  under the
captions  "Principal  Shareholders"  and "Securities  Ownership of Directors and
Executive  Officers" in its  definitive  proxy  statement  dated March 20, 1997,
filed  pursuant to Section  14(a) of the  Securities  Exchange  Act of 1934,  as
amended.

Item 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     None.

                                     PART IV

Item 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a) See Index to Financial Information and Exhibit Index.

     (b) Through December 31, 1996, no reports on Form 8-K were filed subsequent
         to the Registrant's Quarterly Report on Form 10-Q for the quarter ended
         September 30, 1996.


                                                            

<PAGE>
                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto  duly  authorized  on the 20th day of
March, 1997.

                                       WHITMAN CORPORATION

                                       By:  /s/ FRANK T. WESTOVER
                                            ------------------------------     
                                            Frank T. Westover
                                            Senior Vice President-Controller

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  in the  capacities
indicated on the 20th day of March, 1997.

     Signature                          Title

*   Bruce S. Chelberg                   Chairman and Chief
    ----------------------------        Executive Officer and Director
    BRUCE S. CHELBERG                   (principal executive officer)
                       
*   Thomas L. Bindley                   Executive Vice President
    ----------------------------        (principal financial officer)
    THOMAS L. BINDLEY                   

    /s/ FRANK T. WESTOVER               Senior Vice President-Controller
    ----------------------------        (principal accounting officer)
    FRANK T. WESTOVER                   

*   Herbert M. Baum                     Director
    ----------------------------
    HERBERT M. BAUM

*   Richard G. Cline                    Director
    ----------------------------
    RICHARD G. CLINE

*   James W. Cozad                      Director   *By:   /s/ FRANK T. WESTOVER
    ----------------------------                          ---------------------
    JAMES W. COZAD                                        Frank T. Westover   
                                                          Attorney-in-Fact
*   Pierre S. DuPont                    Director          March 20, 1997  
    ----------------------------                          
    PIERRE S. du PONT

*   Archie R. Dykes                     Director
    ----------------------------
    ARCHIE R. DYKES

*   Charles W. Gaillard                 Director
    ----------------------------
    CHARLES W. GAILLARD

*   Jarobin Gilbert, Jr.                Director
    ----------------------------
    JAROBIN GILBERT, JR.

*   Victoria B. Jackson                 Director
    ----------------------------
    VICTORIA B. JACKSON

*   Donald P. Jacobs                    Director
    ----------------------------
    DONALD P. JACOBS

*   Charles S. Locke                    Director
    ----------------------------
    CHARLES S. LOCKE

                                                            

<PAGE>










                      WHITMAN CORPORATION AND SUBSIDIARIES



                             ----------------------

                              FINANCIAL INFORMATION


                   FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K

                       FISCAL YEAR ENDED DECEMBER 31, 1996


                                                           
<PAGE>
                      WHITMAN CORPORATION AND SUBSIDIARIES
                         INDEX TO FINANCIAL INFORMATION



                                                                    

Statement of Financial Responsibility

Independent Auditors' Report

Consolidated Statements of Income for the years ended December 31, 1996, 
1995 and 1994

Consolidated Balance Sheets as of December 31, 1996 and December 31, 1995

Consolidated Statements of Cash Flows for the years ended December 31, 1996, 
1995 and 1994

Consolidated Statements of Shareholders' Equity for the years ended December 31,
1996, 1995 and 1994

Notes to Consolidated Financial Statements

Selected Financial Data

Financial Statement Schedules:

     Financial  statement  schedules  have  been  omitted  because  they are not
     applicable or the required information is shown in the financial statements
     or related notes.


                                                            

<PAGE>
                      STATEMENT OF FINANCIAL RESPONSIBILITY

     The   consolidated   financial   statements  of  Whitman   Corporation  and
subsidiaries  have been prepared by management  which is  responsible  for their
integrity and content.  These  statements  have been prepared in accordance with
generally  accepted  accounting  principles  and include  amounts  which reflect
certain estimates and judgments by management.  Actual results could differ from
these estimates.
     The Board of Directors,  acting  through the Audit  Committee of the Board,
has  responsibility  for  determining  that  management  fulfills  its duties in
connection with the preparation of these consolidated financial statements.  The
Audit Committee meets  periodically and privately with the Independent  Auditors
and with the internal  auditors to review matters relating to the quality of the
financial reporting of the Company,  the related internal controls and the scope
and results of their audits.  The Committee  also meets with  management and the
internal audit staff to review the affairs of the Company.
     To meet management's responsibility for the fair and objective reporting of
the results of operations and financial condition, the Company maintains systems
of internal  controls  and  procedures  to provide  reasonable  assurance of the
reliability of its accounting  records.  These systems include written  policies
and  procedures,  a  substantial  program  of  internal  audit  and the  careful
selection and training of its financial staff.
     The Company's Independent  Auditors,  KPMG Peat Marwick LLP, are engaged to
audit the  consolidated  financial  statements of the Company and to issue their
report  thereon.  Their audit has been  conducted in accordance  with  generally
accepted auditing standards. Their report follows.



                                                            

<PAGE>
KPMG Logo




                          INDEPENDENT AUDITORS' REPORT



THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF WHITMAN CORPORATION:

     We have audited the  accompanying  consolidated  balance  sheets of Whitman
Corporation  and  Subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of  the  years  in  the  three-year   period  ended  December  31,  1996.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.
     We conducted  our audits in accordance  with  generally  accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
consolidated  financial  statement  presentation.  We  believe  that our  audits
provide a reasonable basis for our opinion.
     In our opinion,  the consolidated  financial  statements  referred to above
present  fairly,  in all material  respects,  the financial  position of Whitman
Corporation  and  Subsidiaries at December 31, 1996 and 1995, and the results of
their  operations  and their cash flows for each of the years in the  three-year
period ended December 31, 1996 in conformity with generally accepted  accounting
principles.



/s/ KPMG Peat Marwick LLP

KPMG Peat Marwick LLP
Chicago, Illinois
January 13, 1997




                                                            

<PAGE>
Whitman Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
For the years ended December 31 (in millions)
                                                                                        1996         1995         1994
                                                                                     ----------   ----------   ----------
<S>                                                                                  <C>          <C>          <C>
Sales and revenues                                                                   $  3,111.3   $  2,946.5   $  2,658.8
Cost of goods sold                                                                      2,008.0      1,921.3      1,704.7
                                                                                     ----------   ----------   ----------
   Gross profit                                                                         1,103.3      1,025.2        954.1
Selling, general and administrative expenses                                              716.7        664.1        609.8
Amortization expense                                                                       20.0         18.8         17.5
                                                                                     ----------   ----------   ----------
   Operating income                                                                       366.6        342.3        326.8
Interest expense                                                                          (72.2)       (74.6)       (71.1)
Interest income                                                                             6.9          6.4          6.4
Other expense, net                                                                        (25.6)       (14.4)       (25.2)
Unrealized investment loss                                                                   --           --        (24.2)
                                                                                     ----------   ----------   ----------
   Income before income taxes                                                             275.7        259.7        212.7
Income tax provisions                                                                     117.2        107.4         88.1
                                                                                     ----------   ----------   ----------
   Income from continuing operations before minority interest                             158.5        152.3        124.6
Minority interest                                                                          19.1         18.8         18.2
                                                                                     ----------   ----------   ----------
   Income from continuing operations                                                      139.4        133.5        106.4
Loss from discontinued operations after taxes (Note 2)                                       --           --         (3.2)
                                                                                     ----------   ----------   ----------
   Net income                                                                        $    139.4   $    133.5   $    103.2
                                                                                     ==========   ==========   ==========
Average number of common shares outstanding                                               106.4        106.2        106.2
                                                                                     ==========   ==========   ==========

INCOME (LOSS) PER COMMON SHARE (IN DOLLARS):
Continuing operations                                                                $     1.31   $     1.26   $     1.00
Discontinued operations                                                                      --           --        (0.03)
                                                                                     ----------   ----------   ----------
Net income                                                                           $     1.31   $     1.26   $     0.97
                                                                                     ==========   ==========   ==========
Cash dividends per common share                                                      $     0.41   $     0.37   $     0.33
                                                                                     ==========   ==========   ==========

</TABLE>
The following notes are an integral part of these statements.


                                                            

<PAGE>
Whitman Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
As of December 31 (in millions)                                                                      1996         1995
                                                                                                  ----------   ---------- 
<S>                                                                                               <C>          <C> 
ASSETS:                                                                                          
Current assets:
   Cash and cash equivalents                                                                      $     76.8   $     53.3
   Receivables - net of allowance for doubtful accounts of $7.3 million in 1996 and
      $5.7 million in 1995                                                                             396.9        378.5
   Inventories:
      Raw materials and supplies                                                                        95.4         84.5
      Work in process                                                                                   61.7         48.1
      Finished goods                                                                                   150.2        134.5
                                                                                                  ----------   ----------
         Total inventories                                                                             307.3        267.1
   Other current assets                                                                                 74.0         62.2
                                                                                                  ----------   ----------
     Total current assets                                                                              855.0        761.1
                                                                                                  ----------   ----------
Investments                                                                                            181.3        253.7
Property (at cost):
     Land                                                                                               71.7         71.2
     Buildings and improvements                                                                        355.8        340.0
     Machinery and equipment                                                                         1,017.6        945.6
                                                                                                  ----------   ----------
        Total property                                                                               1,445.1      1,356.8
     Accumulated depreciation and amortization                                                        (710.8)      (659.3)
                                                                                                  ----------   ----------
        Net property                                                                                   734.3        697.5
                                                                                                  ----------   ----------
Intangible assets, net of  accumulated amortization of $164.5 million in 1996 and
   $143.7 million in 1995                                                                              553.8        568.8
Other assets                                                                                            85.0         82.2
                                                                                                  ----------   ----------
     Total assets                                                                                 $  2,409.4   $  2,363.3
                                                                                                  ==========   ==========

</TABLE>
The following notes are an integral part of these statements.


                                                           

<PAGE>
Whitman Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
As of December 31 (in millions)                                                                      1996         1995
                                                                                                  ----------   ----------
<S>                                                                                               <C>          <C>
LIABILITIES AND SHAREHOLDERS' EQUITY:                                                            
Current liabilities:
   Short-term debt, including current maturities of long-term debt                                $     94.3   $     93.8
   Accounts and dividends payable                                                                      266.5        248.6
   Income taxes payable                                                                                  7.2          9.2
   Accrued expenses:
     Salaries and wages                                                                                 44.2         46.4
     Interest                                                                                           21.7         21.2
     Other expenses                                                                                     92.1         88.4
                                                                                                  ----------   ----------
        Total current liabilities                                                                      526.0        507.6
                                                                                                  ----------   ----------
Long-term debt                                                                                         837.5        828.2
Deferred income taxes                                                                                   47.1         33.4
Other liabilities                                                                                      118.1        141.0
Minority interest                                                                                      238.5        225.3
Shareholders' equity:
   Common stock (no par, 250.0 million shares authorized;
     110.6 million issued in 1996 and 109.2 million issued in 1995)                                    456.3        427.8
   Retained income                                                                                     426.7        336.6
   Cumulative translation adjustment                                                                   (82.5)       (80.3)
   Unrealized investment gain                                                                            1.8          9.7
   Treasury stock (8.0 million shares in 1996 and 4.0 million shares in 1995)                         (160.1)       (66.0)
                                                                                                  ----------   ----------
     Total shareholders' equity                                                                        642.2        627.8
                                                                                                  ----------   ----------

     Total liabilities and shareholders' equity                                                   $  2,409.4   $  2,363.3
                                                                                                  ==========   ==========

</TABLE>
The following notes are an integral part of these statements.


                                                            

<PAGE>
Whitman Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
For the years ended December 31 (in millions)                                           1996         1995         1994
                                                                                      ---------    ---------    --------- 
<S>                                                                                   <C>          <C>          <C>       
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations                                                     $   139.4    $   133.5    $   106.4
Adjustments to reconcile to net cash provided by operating activities:
   Depreciation and amortization                                                          115.8        108.3         98.0
   Unrealized investment loss                                                                --           --         24.2
   Other                                                                                   24.6         11.6         23.9
Changes in assets and liabilities, exclusive of acquisitions:
   Increase in receivables                                                                (17.6)       (21.9)       (11.7)
   Increase in inventories                                                                (40.5)       (35.1)       (10.3)
   Increase in payables                                                                    17.5         17.5          5.7
   Net change in other assets and liabilities                                              (5.8)       (20.6)       (24.6)
                                                                                      ---------    ---------    ---------
Net cash provided by continuing operations                                                233.4        193.3        211.6
Net cash used by discontinued operations                                                  (13.2)       (19.7)        (5.8)
                                                                                      ---------    ---------    ---------
   Net cash provided by operating activities                                              220.2        173.6        205.8
                                                                                      ---------    ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital investments                                                                      (151.4)      (174.8)      (127.4)
Proceeds from sales of property                                                            12.7         12.5         18.2
Companies acquired, net of cash acquired                                                     --        (60.5)          --
Investments in joint ventures                                                             (31.0)       (18.6)        (4.5)
Purchases of investments                                                                  (92.6)      (221.4)      (168.8)
Proceeds from sales of investments                                                        176.1        213.4        156.9
                                                                                      ---------    ---------    ---------
   Net cash used in investing activities                                                  (86.2)      (249.4)      (125.6)
                                                                                      ---------    ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayment of bank lines of credit and commercial paper                                (15.0)       (27.5)       (41.1)
Proceeds from issuance of long-term debt                                                  128.0        278.4        231.9
Repayment of long-term debt                                                              (103.1)      (147.8)      (221.1)
Net increase in notes payable                                                               1.3          2.5           --
Issuance of common stock                                                                   14.6         12.8          6.0
Treasury stock purchases                                                                  (93.2)       (18.8)       (42.5)
Common dividends                                                                          (42.9)       (38.8)       (34.8)
                                                                                      ---------    ---------    ---------
   Net cash provided by (used in) financing activities                                   (110.3)        60.8       (101.6)
                                                                                      ---------    ---------    ---------
Effects of exchange rate changes on cash and cash equivalents                              (0.2)        (3.0)        (0.3)
                                                                                      ---------    ---------    ---------
Change in cash and cash equivalents                                                        23.5        (18.0)       (21.7)
Cash and cash equivalents at beginning of year                                             53.3         71.3         93.0
                                                                                      ---------    ---------    ---------
Cash and cash equivalents at end of year                                              $    76.8    $    53.3    $    71.3
                                                                                      =========    =========    =========

</TABLE>
The following notes are an integral part of these statements.


                                                           

<PAGE>
Whitman Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
For the years ended
December 31, 1996,                                                      Cumulative   Unrealized
1995 and 1994                          Common Stock         Retained    Translation  Investment        Treasury Stock
                                 -----------------------                                           -------------------
(dollars in millions)                Shares      Amount      Income    Adjustments   Gain/(Loss)     Shares      Amount
                                 ------------    ------     -------    ------------  -----------   ----------   -------
<S>                              <C>             <C>        <C>        <C>           <C>           <C>          <C>
Balance, January 1, 1994         107,510,558     $ 404.4    $ 172.4    $ (52.3)      $       --      (419,242)  $  (7.5)
                                 -----------     -------    -------    -------       ----------    ----------    ------
Net income                                                    103.2
Treasury stock purchases                                                                           (2,656,374)    (42.5)
Stock compensation plans             594,432         8.8       (0.9)                                    2,300        --
Translation adjustments                                                    0.5
Unrealized investment gain                                                                  1.3
Dividends declared                                            (34.8)
                                 -----------     -------    -------    -------       ----------    ----------    ------
Balance, December 31, 1994       108,104,990       413.2      239.9      (51.8)             1.3    (3,073,316)    (50.0)
                                 -----------     -------    -------    -------       ----------    ----------    ------
Net income                                                    133.5
Treasury stock purchases                                                                           (1,034,726)    (18.8)
Stock compensation plans           1,094,844        14.6        2.0                                   (19,564)      0.1
Common stock issued for
   acquisitions                                                                                       126,700       2.7
Translation adjustments                                                  (28.5)
Unrealized investment gain                                                                  8.4
Dividends declared                                            (38.8)
                                 -----------     -------    -------    -------       ----------    ----------    ------
Balance, December 31, 1995       109,199,834       427.8      336.6      (80.3)             9.7    (4,000,906)    (66.0)
                                 -----------     -------    -------    -------       ----------    ----------    ------
Net income                                                    139.4
Treasury stock purchases                                                                           (3,989,894)    (93.2)
Stock compensation plans           1,395,959        28.5       (6.4)                                  (29,188)     (1.2)
Common stock issued for
    acquisitions                                                                                       11,614       0.3
Translation adjustments                                                   (2.2)
Unrealized investment loss                                                                 (7.9)
Dividends declared                                            (42.9)
                                 -----------     -------    -------    -------       ----------    ----------   -------  
Balance, December 31, 1996       110,595,793     $ 456.3    $ 426.7    $ (82.5)      $      1.8    (8,008,374)  $(160.1)
                                 ===========     =======    =======    =======       ==========    ==========   =======

</TABLE>
The following notes are an integral part of these statements.


                                                            

<PAGE>
Whitman Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION.  The consolidated  financial statements include the
accounts of Whitman  Corporation  and all of its significant  subsidiaries  (the
Company).  
CASH AND CASH EQUIVALENTS.  Cash and cash equivalents  consist of deposits with
banks and financial institutions which are unrestricted as to withdrawal or use,
and  which  have  original  maturities  of three  months  or less. 
INVENTORIES. Inventories are valued at the lower of cost (principally determined
on the first-in, first-out or average methods) or net realizable value.
INVESTMENTS.  Investments  include  real  estate held for sale,  principally  at
Illinois Center, a large single location,  mixed use development  located on the
Chicago  lakefront.  The  investments  in real  estate are carried at cost which
management  believes  is lower than net  realizable  value.  When real estate is
sold, the net proceeds are deducted from the carrying  value.  Also included are
domestic  and  U.S.   dollar-denominated   foreign  government   securities  and
securities  guaranteed by such  governments or their agencies,  bank obligations
and corporate  obligations (which are recorded at fair market value), as well as
other  miscellaneous  investments.  
PROPERTY.  Depreciation  is computed on the  straight-line  method and  includes
depreciation  for  properties  under  capital  leases.  When property is sold or
retired, the cost and accumulated  depreciation are eliminated from the accounts
and gains or  losses  are  recorded  in other  expense,  net.  Expenditures  for
maintenance  and repairs are expensed as  incurred.  The  approximate  ranges of
annual depreciation rates for major property classifications are as follows:

         Buildings                                      2% -  5%
         -------------------------------------------------------
         Machinery and equipment                        5% - 33%
         -------------------------------------------------------

INTANGIBLE ASSETS.  Intangible  assets primarily  consist of the excess of cost
over fair market  value of tangible  assets of acquired  businesses,  reflecting
premiums paid for consumer  franchises,  brand names,  trademarks,  distribution
systems,  manufacturing know-how and other intangibles.  Such premiums generally
are being  amortized on  straight-line  bases over 40 years,  with minor amounts
being  amortized over shorter  periods.  The Company  evaluates,  at least on an
annual basis, the carrying value of its goodwill by reviewing  undiscounted cash
flows by operating  units. If the sum of the projected  undiscounted  cash flows
over the  remaining  lives of the related  assets  does not exceed the  carrying
value of the related  goodwill,  goodwill  would be adjusted for the  difference
between the fair value and the carrying value of such goodwill. The Company does
not believe there has been any material  impairment of its goodwill. 
INCOME PER COMMON SHARE.  Income  per common  share is based upon the  weighted
average number of common and common equivalent shares outstanding,  assuming the
exercise  of stock  options  where  dilutive.  
REVENUE  RECOGNITION.   Revenue  is  recognized  when  title  to  a  product  is
transferred  to the  customer  or upon  completion  of a  service.  
ADVERTISING.  Advertising  expenditures  are expensed as  incurred.  
STOCK BASED  COMPENSATION.  In 1995, the Financial  Accounting  Standards  Board
(FASB)  issued  Statement of  Financial  Accounting  Standards  (SFAS) No. 123 -
Accounting for Stock-Based Compensation.  The Company has elected to continue to
apply the provisions of Accounting  Principles Board (APB) Opinion No. 25 and to
display  the  estimated  proforma  effects  measured  under  the new  accounting
pronouncement  in  the  Notes  to  the  Consolidated  Financial  Statements (see
Note 8). 
<PAGE>
INTEREST  RATE AND  CURRENCY  SWAPS.  The Company  enters into a variety of
interest
rate and currency swaps in its management of interest rate and foreign  currency
exposures.  The differential to be paid or received is accrued as interest rates
change  and is  recognized  over  the  lives  of the  agreements.  Realized  and
unrealized  gains and losses on foreign  currency  transactions  are  recognized
currently in other expense, net.

2.   DISCONTINUED OPERATIONS

     In the  fourth  quarter  of  1994,  the  Company  recorded  a $3.2  million
after-tax  charge to  discontinued  operations.  This  charge was a result of an
on-going  evaluation of the Company's  potential  liabilities for  environmental
claims which  principally  relate to previously sold subsidiaries (see Note 11).
As  a  result  of  additional  claims,  additional  information  and  experience
concerning possible  remediation costs, as well as continuing legal,  consulting
and other related  expenses,  the Company  provided $46.8 million ($29.9 million
after  tax) for  additional  estimated  expenses  relating  to  these  potential
environmental liabilities. The charge also reflected settlement of the Company's
income tax audits for the years  1980-1987  with the  Internal  Revenue  Service
(IRS),  which  included  some  large  potential  claims  for  issues  related to
previously  discontinued  operations.  As a  result  of these  settlements,  the
Company  restored  $26.7  million to income for tax  accruals  no longer  deemed
necessary.

3.   INCOME TAX PROVISIONS

     The income tax provisions consisted of:
<TABLE>
<CAPTION>
(in millions)                                  1996         1995        1994
                                             -------      -------     -------
<S>                                          <C>          <C>         <C>
Current:
   Federal                                   $  77.0      $  72.6     $  82.1
   Foreign                                      10.1         11.8        16.3
   State and local                              13.0         10.0        13.6
                                             -------      -------     -------
     Total current                             100.1         94.4       112.0
                                             =======      =======     =======
Deferred:
   Federal                                      15.0          9.7       (21.4)
   Foreign                                       0.7          0.4        (1.6)
   State and local                               1.4          2.9        (0.9)
                                             -------      -------     -------
     Total deferred                             17.1         13.0       (23.9)
                                             -------      -------     -------
Income tax provisions                        $ 117.2      $ 107.4     $  88.1
                                             =======      =======     =======
</TABLE>
<PAGE>
     The items which gave rise to differences  between the income tax provisions
in the income  statements and income taxes  computed at the U.S.  statutory rate
are summarized below:
<TABLE>
<CAPTION>
                                                                          1996              1995              1994
                                                                     ---------------  ---------------   ---------------
(dollars in millions)                                                 Amount      %    Amount      %     Amount      %
                                                                     -------    ----  -------    ----   -------    ----
<S>                                                                  <C>        <C>   <C>        <C>    <C>        <C>
Income tax expense computed at statutory rate                        $  96.5    35.0  $  90.9    35.0   $  74.4    35.0
State income taxes, net of federal income tax benefit                    9.3     3.4      8.4     3.2       8.3     3.9
Higher foreign effective tax rates                                       7.9     2.8      5.8     2.2       4.1     1.9
Goodwill amortization                                                    4.9     1.8      5.2     2.0       5.1     2.4
Other items, net                                                        (1.4)   (0.5)    (2.9)   (1.0)     (3.8)   (1.8)
                                                                     -------    ----  -------    ----   -------    ----
Income tax provisions                                                $ 117.2    42.5  $ 107.4    41.4   $  88.1    41.4
                                                                     =======    ====  =======    ====   =======    ====
</TABLE>
     Pretax  income from  foreign  operations  amounted to $9.3  million,  $18.9
million,  and $31.6 million in 1996,  1995 and 1994,  respectively.  U.S. income
taxes have not been provided on the undistributed income ($120.6 million) of the
Company's foreign subsidiaries which currently is not intended to be remitted to
the U.S.
     The IRS has completed its examinations of the Company's  Federal income tax
returns  through 1987. The IRS had proposed  adjustments for the years 1980-1987
which would have  substantially  increased  the  Company's  tax  liability.  The
Company has  settled  all issues for these  years,  and  accruals  which were no
longer required were credited to income from continuing  operations or to income
from  discontinued  operations,  as appropriate (see Note 2). The accruals which
have been restored to income from  continuing  operations in 1994 were reflected
in "other items, net" in the table above.
     Deferred  income taxes are created by "temporary  differences"  which exist
between  amounts of assets and  liabilities  recorded  for  financial  reporting
purposes  and such  amounts as  reported  under  income tax  regulations.  These
temporary differences, which gave rise to deferred tax assets and liabilities at
December 31, are attributable to:
<PAGE>
<TABLE>
<CAPTION>
(in millions)                                              1996         1995
                                                        --------     --------
<S>                                                     <C>          <C>
Deferred tax assets:
Provision for closed and sold businesses                $  30.7      $  33.9
Lease transactions                                         15.8         17.8
Self-insurance provisions                                  13.8         18.6
Postretirement benefit accruals                             8.6         11.9
Other                                                      45.7         36.3
                                                        -------      -------
   Total deferred tax assets                              114.6        118.5
                                                        -------      -------
Deferred tax liabilities:
Property, plant and equipment                              73.5         71.0
Pensions                                                    7.0          8.8
Intangibles                                                10.9          9.2
Other                                                      52.5         50.5
                                                        -------      -------
   Total deferred tax liabilities                         143.9        139.5
                                                        -------      -------
     Net deferred tax liability                         $  29.3      $  21.0
                                                        =======      =======
Net deferred tax liability (asset) included in:
   "Other current assets"                               $ (17.8)     $ (12.4)
   "Deferred income taxes"                                 47.1         33.4
                                                        -------      -------
Net deferred tax liability                              $  29.3      $  21.0
                                                        =======      =======
</TABLE>
<PAGE>
4.   DEBT

     Debt at December 31 consisted of the following:
<TABLE>
<CAPTION>
(in millions)                                                                                         1996         1995
                                                                                                   ---------    ---------
<S>                                                                                                <C>          <C>
6.3% to 6.9% notes due 2000 and 2005                                                               $   136.5    $   136.5
7.5% notes due 2003                                                                                    125.0        125.0
7.3% and 7.4% notes due 2026 ($100 million and $25 million due 2004 and 2008,
   respectively, at option of note holder)                                                             125.0           --
6.5% notes due 2006                                                                                    100.0        100.0
7.6% notes due 2015                                                                                    100.0        100.0
8.3% notes due 2007                                                                                    100.0        100.0
7.5% notes due 2001                                                                                     75.0         75.0
8.1% notes due 1997                                                                                     50.5         50.5
Term loan agreements and notes due 1997 through 2000, effective interest rates 5.5% to 8.0%             95.0        125.0
Notes due 1996, effective interest rate 6.1%                                                              --         70.0
Commercial paper and revolving credit borrowings, effective interest rate 5.7%                            --         15.0
Obligations under capital leases                                                                        14.5         17.4
Various other debt                                                                                      15.2         12.3
                                                                                                   ---------    ---------
Total debt                                                                                             936.7        926.7
Less:  Amount due within one year                                                                       94.3         93.8
       Unamortized discount                                                                              4.9          4.7
                                                                                                   ---------    ---------
Total long-term debt                                                                               $   837.5    $   828.2
                                                                                                   =========    =========
</TABLE>
     The Company maintains a $200 million  commercial paper program.  There were
no  borrowings  under this program at December  31, 1996,  while $15 million was
outstanding at December 31, 1995.  The Company also has a contractual  revolving
credit  facility  which  permits it to borrow up to $300  million.  The interest
rates on the revolving  credit  facility,  expiring in 2000,  may be floating or
fixed and are based on  domestic  rates or the  London  Interbank  Offered  Rate
("LIBOR")  at the  option of the  Company.  There were no  borrowings  under the
revolving  credit  facility at either  December 31, 1996 or 1995.  As such,  the
entire  $300  million  of the  revolving  credit  facility  remained  unused and
available to back the Company's commercial paper borrowings.
The fees payable on the unused portion of such commitments are not significant.
     The amounts of long-term  debt  maturing in 1998  through  2001 are:  $41.4
million, $11.2 million, $106.8 million, and $76.3 million, respectively.
     Interest expense  included $1.7 million,  $1.6 million and $1.9 million for
1996, 1995 and 1994,  respectively,  relating to liabilities under capital lease
agreements.   Interest  capitalized  during  periods  of  construction  was  not
significant.
     The  Company  has  pledged  certain  assets,  consisting  predominantly  of
equipment and buildings,  with a net book value of $91.3 million at December 31,
1996,  as  collateral  for various  long-term  loan  agreements.  Certain of the
Company's  financing   arrangements  contain  restrictions  which,  among  other
features,  require  maintenance of certain financial  ratios.  The Company is in
compliance with these debt covenants.
<PAGE>
5.   FINANCIAL INSTRUMENTS

     The Company uses  financial  derivative  instruments to manage its interest
rate risk.  Interest rate swap transactions and forward rate contracts generally
involve the exchange of fixed and floating  rate  interest  payment  obligations
without the exchange of the underlying notional amounts.
     The Company has entered into certain  interest  rate swap  agreements  with
commercial  and investment  banks in which it pays a floating  interest rate and
receives a fixed  interest  rate.  During  1995,  the Company  also entered into
several  forward rate  agreements.  At December 31, 1996,  the Company had a $40
million  interest rate swap related to its 6.5% notes due 2006, in which it pays
5.6% and receives 5.2%. The swap matures in 1997.
     The  notional   amounts  related  to  the  Company's   interest  rate  swap
transactions  and  forward  rate  agreement  activity  for  1995  and  1996  are
summarized as follows (in millions):
<TABLE>
<CAPTION>
                                                              Interest Rate Swaps              Forward Rate Agreements
                                                          ----------------------------       ----------------------------
                                                           Pay Fixed      Pay Variable        Pay Fixed      Pay Variable
                                                          ------------    ------------       ------------    ------------
<S>                                                       <C>             <C>                <C>              <C>
Balance, January 1, 1995                                  $     --        $   165.0          $     --         $    --
                                                          --------        ---------          --------         -------
New contracts                                                   --               --             225.0              --
Expired contracts                                               --               --             (60.0)             --
                                                          --------        ---------          --------         -------
Balance, December 31, 1995                                      --            165.0             165.0              --
                                                          --------        ---------          --------         -------
Expired contracts                                               --           (125.0)           (165.0)             --
                                                          --------        ---------          --------         -------
Balance, December 31, 1996                                $     --        $    40.0          $     --         $    --
                                                          ========        =========          ========         =======
</TABLE>

     Whitman's  interest rate hedging programs had no significant  impact on the
annual  weighted  average cost of debt in 1996 and increased it from 8.2 percent
to 8.3  percent in 1995 and from 8.7  percent to 9.0  percent in 1994.  Interest
expense  was  increased  by $1.5  million in 1995 and $2.1  million in 1994 as a
result of hedging programs.
     The Company  previously  entered into foreign  currency swap  agreements to
reduce the effect of changes in foreign  exchange rates on its debt  denominated
in foreign  currencies.  Substantially  all foreign  currency  denominated  debt
outstanding  at December 31, 1994,  and its related  interest  payments had been
hedged in U.S.  dollars.  Under the hedge  agreements,  in  January,  1995,  the
Company repaid the 138.2 million Swiss franc debt at an effective  exchange rate
of 2.764 Swiss francs per U.S.  dollar ($50.0  million),  compared to the actual
exchange  rate  of  1.288  Swiss  francs  per  U.S.  dollar  ($107.3   million).
Additionally,  in February,  1995,  the Company  repaid the 50 million  Canadian
dollar debt at an effective  exchange  rate of 1.312  Canadian  dollars per U.S.
dollar ($38.1  million),  compared to the actual exchange rate of 1.403 Canadian
dollars per U.S. dollar ($35.6 million).
     Assuming  the Company  had left the  interest  payments  payable in foreign
currency (i.e.,  unhedged),  the Company's interest expense would have decreased
by less than $0.1  million in 1995 and by $0.3  million  in 1994,  respectively.
Consequently,  the  impact of hedging  had no  material  effect on the  weighted
average cost of borrowing in 1995 or 1994.
<PAGE>
     At December 31, 1996,  the Company had $82.3  million in floating rate debt
exposure  (including  notional  principal of $40.0 million on interest rate swap
agreements).  Substantially  all of the floating rate exposure is related to six
month LIBOR  rates.  If the six month LIBOR rates  increased  by 50 basis points
(0.50 percent), the Company's 1996 interest expense related to the floating rate
debt outstanding during 1996 would have increased by an additional $0.8 million.
     As of the end of each of the last two years,  the  Company  had no deferred
gains or losses related to terminated interest rate swap agreements.
     The Company  periodically  monitors its financial  instrument positions and
the credit ratings of its  counterparties and limits the amount of exposure with
any one  counterparty.  The  Company is  exposed to credit  loss in the event of
nonperformance  by the other parties to the interest rate swap  agreements.  The
Company does not anticipate nonperformance by any of the counterparties.
     The fair market value of the  Company's  floating  rate debt as of December
31, 1996 approximated its carrying value. The fixed rate debt of the Company had
a carrying  value of $894.4 million and a fair market value of $905.4 million at
December  31,  1996.  The fair market  value of the fixed rate debt was based on
quotes from financial institutions for instruments with similar  characteristics
or upon discounting future cash flows.

6.   PENSION AND OTHER POSTRETIREMENT PLANS

Company-sponsored  defined  benefit  pension  plans.  Substantially  all  of the
Company's U.S. employees are covered under various defined benefit pension plans
sponsored and funded by the Company.  Plans covering salaried  employees provide
pension  benefits  based on years of  service  and  generally  are  limited to a
maximum of 20 percent of the employees' average annual  compensation  during the
five years  preceding  retirement.  Plans covering  hourly  employees  generally
provide  benefits of stated  amounts  for each year of service.  Plan assets are
invested primarily in common stocks, corporate bonds and government securities.
     Net periodic  pension cost for 1996,  1995 and 1994  included the following
components:
<TABLE>
<CAPTION>
(in millions)                                                                           1996         1995         1994
                                                                                      --------     --------     --------
<S>                                                                                   <C>          <C>          <C>
Service cost - benefits earned during period                                          $    9.1     $    7.7     $    7.5
Interest cost on projected benefit obligation                                             18.7         17.9         16.4
Actual return on assets                                                                  (31.6)       (37.8)        (6.3)
Net amortization and deferral                                                             10.9         18.4        (12.2)
                                                                                      --------     --------     --------
Total net periodic pension cost                                                       $    7.1     $    6.2     $    5.4
                                                                                      ========     ========     ========
</TABLE>
     Pension costs are funded in amounts not less than minimum  levels  required
by regulation.  The principal economic  assumptions used in the determination of
net periodic pension cost include the following:
<TABLE>
<CAPTION>
                                                                                        1996         1995         1994
                                                                                      --------     --------     --------
<S>                                                                                     <C>           <C>         <C>
Discount rate                                                                           7.5%          8.5%         7.0%
Expected long-term rate of return on assets                                             9.5%          9.5%        10.0%
Rates of increase in compensation levels                                                5.0%          6.0%         4.5%
</TABLE>
<PAGE>
     The  following  table  reconciles  the pension  plans' funded status to the
amounts  recognized in the Company's  balance sheets as of December 31, 1996 and
1995:
<TABLE>
<CAPTION>
                                                                              1996                           1995
                                                                   ---------------------------   ----------------------------
                                                                    Assets Exceed  Accumulated    Assets Exceed  Accumulated
                                                                     Accumulated    Benefits        Accumulated   Benefits
(in millions)                                                          Benefits   Exceed Assets     Benefits    Exceed Assets
                                                                   -------------- -------------  -------------- -------------
<S>                                                                   <C>           <C>             <C>            <C> 
Actuarial present value of benefit obligation
(measured as of September 30):
   Vested benefit obligation                                          $(174.5)      $ (36.9)        $(155.0)       $ (40.1)
                                                                      =======       =======         =======        =======
   Accumulated benefit obligation                                     $(182.8)      $ (41.0)        $(162.1)       $ (46.2)
                                                                      =======       =======         =======        =======
   Projected benefit obligation                                       $(212.5)      $ (45.0)        $(189.5)       $ (49.5)

Plan assets at fair market value (measured as of September 30)          245.6          32.3           209.3           40.7
                                                                      -------       -------         -------        -------
Plan assets in excess of (less than) projected benefit obligation        33.1         (12.7)           19.8           (8.8)
                                                                      -------       -------         -------        -------
Unrecognized net asset at transition to SFAS No. 87                      (3.0)           --            (3.2)          (0.4)
Unrecognized prior service cost                                          12.7           9.7            13.9            5.7
Unrecognized net loss (gain)                                            (18.5)          2.1            (7.7)           2.6
Additional liability required to recognize minimum liability               --          (8.3)             --           (5.7)
                                                                      -------       -------         -------        -------
Prepaid (accrued) pension cost recognized on balance sheets           $  24.3       $  (9.2)        $  22.8        $  (6.6)
                                                                      =======       =======         =======        =======
</TABLE>
     The principal  economic  assumptions  used in determining the above benefit
obligations were a discount rate of 7.5 percent and a rate of increase in future
compensation levels of 5.0 percent in both 1996 and 1995.

COMPANY-SPONSORED  DEFINED  CONTRIBUTION  PLANS.  Substantially  all former U.S.
salaried  employees,  certain U.S. hourly  employees and certain  Australian and
Canadian employees  participate in voluntary,  contributory defined contribution
plans to  which  the  Company  makes  partial  matching  contributions.  Company
contributions  to these plans amounted to $10.5 million,  $10.5 million and $9.7
million in 1996, 1995 and 1994, respectively.

MULTI-EMPLOYER PENSION PLANS. The Company's subsidiaries participate in a number
of  multi-employer  pension  plans which provide  benefits to certain  unionized
employee  groups of the Company.  Amounts  contributed to the plans totaled $6.2
million, $5.5 million and $4.8 million in 1996, 1995 and 1994, respectively.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS.  The Company provides substantially
all  former  U.S.  salaried  employees  who  retired  prior to July 1,  1989 and
selected  other  employees  in the U.S.  and Canada with certain life and health
care benefits. U.S. salaried employees retiring after July 1, 1989 generally are
required to pay the full cost of these benefits.  Eligibility for these benefits
varies with the  employee's  classification  prior to  retirement.  Benefits are
provided through insurance contracts or welfare trust funds. The insurance plans
generally  are  financed by monthly  insurance  premiums  and are based upon the
prior  year's  experience.  Benefits  paid from a welfare  trust are financed by
monthly  deposits which  approximate  the amount of current claims and expenses.
The Company has the right to modify or terminate these benefits.
<PAGE>
     Net periodic cost of postretirement  benefits other than pensions for 1996,
1995 and 1994 included the following components:
<TABLE>
<CAPTION>
(in millions)                                                                          1996         1995        1994
                                                                                      ------       ------      ------
<S>                                                                                   <C>          <C>         <C>
Service cost-benefits earned during the period                                        $  0.2       $  0.2      $  0.3
Interest cost on accumulated postretirement benefit obligation                           2.0          2.2         2.2
Net amortization and deferral                                                           (0.6)        (0.7)        0.4
                                                                                      ------       ------      ------
Net periodic postretirement benefit cost                                              $  1.6       $  1.7      $  2.9
                                                                                      ======       ======      ======
</TABLE>
     The  principal  economic  assumptions  used  in  the  determination  of net
 periodic  cost of  postretirement  benefits  other than  pensions  included the
 following:
<TABLE>
<CAPTION>
                                                                1996                  1995                  1994
                                                            ------------          ------------          ------------
<S>                                                         <C>                   <C>                   <C>
Discount rate                                                   7.5%                  8.5%                  7.0%

Rate of increase in compensation levels                         5.0%                  6.0%                  4.5%

Rate of increase in the per capita cost                     9.5% in 1996          9.9% in 1995          10.3% in 1994
   of covered health care benefits                           decreasing            decreasing            decreasing
                                                              gradually             gradually             gradually
                                                             to 5.5% by            to 6.5% by            to 5.0% by
                                                            the year 2006         the year 2006         the year 2006
</TABLE>
     The Company's postretirement life and health care plans are not funded. The
unfunded status of the plans as of December 31, 1996 and 1995 was as follows:
<TABLE>
<CAPTION>
(in millions)                                                                                        1996         1995
                                                                                                   -------      -------
<S>                                                                                                <C>          <C>
Actuarial present value of accumulated postretirement benefit obligation:
   Retirees                                                                                        $  22.5      $  25.6
   Fully eligible active plan participants                                                             0.8          0.5
   Other active plan participants                                                                      4.8          3.0
                                                                                                   -------      -------
     Total                                                                                            28.1         29.1
                                                                                                   -------      -------
Plan assets at fair market value                                                                        --           --
Accumulated postretirement benefit obligation in excess of plan assets                                28.1         29.1
Unrecognized net gain                                                                                  8.9          8.8
Unrecognized prior service cost                                                                        0.2          0.2
                                                                                                   -------      -------
Accrued postretirement benefit cost                                                                $  37.2      $  38.1
                                                                                                   =======      =======
</TABLE>
<PAGE>
     The principal  economic  assumptions  used in determining the above benefit
obligations were as follows:
<TABLE>
<CAPTION>
                                                                              1996                          1995
                                                                          ------------                  ------------
<S>                                                                 <C>                           <C>
Discount rate                                                                 7.5%                          7.5%

Rate of increase in compensation levels                                       5.0%                          5.0%

Rate of increase in the per capita cost of covered                        9.1% in 1997                  9.5% in 1996
   health care benefits                                               decreasing gradually          decreasing gradually
                                                                    to 5.5% by the year 2007      to 5.5% by the year 2006
</TABLE>
     Increasing  the assumed  health care cost trend rate by 1 percentage  point
would have  increased  the  accumulated  postretirement  benefit  obligation  at
December 31, 1996 by $2.2 million and net periodic  postretirement  benefit cost
for 1996 by $0.2 million.  Decreasing the assumed health care cost trend rate by
1 percentage  point would have reduced the  accumulated  postretirement  benefit
obligation   at  December  31,  1996  by  $2.0  million  and  the  net  periodic
postretirement benefit cost for 1996 by $0.2 million.

Multiemployer   postretirement   medical  and  life  insurance.   The  Company's
subsidiaries participate in a number of multiemployer plans which provide health
care and survivor benefits to unionized employees during their working lives and
after  retirement.  Portions  of the  benefit  contributions,  which  cannot  be
disaggregated,  related to postretirement benefits for plan participants.  Total
amounts charged against income and contributed to the plans  (including  benefit
coverage during their working lives) amounted to $9.4 million, $6.0 million, and
$5.5 million in 1996, 1995 and 1994, respectively.

7.   LEASES

     At December 31, 1996,  annual  minimum  rental  payments  under capital and
operating  leases that have initial  noncancellable  terms in excess of one year
were as follows:
<TABLE>
<CAPTION>
                                                    Capital        Operating
(in millions)                                        Leases          Leases
                                                   ---------       ---------
<S>                                                <C>             <C>
1997                                               $   2.3         $   57.9
1998                                                   2.2             48.7
1999                                                   2.1             38.4
2000                                                   2.0             30.4
2001                                                   2.0             24.4
Thereafter                                            14.3            111.5
                                                   -------         --------
Total minimum lease payments                          24.9         $  311.3
                                                                   ========
Less imputed interest                                 10.4
                                                   -------
Present value of minimum lease payments            $  14.5
                                                   =======
</TABLE>
<PAGE>
     Minimum  payments  under  operating  leases have not been reduced by $118.4
million  of  sublease   rental   income   which  is  due  in  the  future  under
noncancellable subleases.
     Total  rent  expense  applicable  to  operating  leases  amounted  to $37.6
million,  $36.3 million and $33.2 million in 1996, 1995 and 1994,  respectively.
These  amounts have been  reduced by sublease  rental  income of $23.2  million,
$22.2  million and $21.4  million,  respectively.  A majority  of the  Company's
leases  provide that the Company pay taxes,  maintenance,  insurance and certain
other operating expenses.

8.   STOCK OPTIONS AND SHARES RESERVED

     The Company's  Stock  Incentive Plan (the "Plan"),  originally  approved by
shareholders in 1982 and  subsequently  amended from time to time,  provides for
granting  incentive  stock options,  nonqualified  stock options,  related stock
appreciation  rights (SARs),  restricted stock awards, and performance awards or
any combination of the foregoing. Incentive stock options and nonqualified stock
options are exercisable  during a ten-year period  beginning six months to three
years after the date of grant. Stock appreciation  rights have been granted with
respect to certain nonqualified and incentive stock options. All options granted
were at fair market value at the date of grant.

     Changes in options outstanding are summarized as follows:
<TABLE>
<CAPTION>
                                                                      Options Outstanding
                                                --------------------------------------------------------------------
                                                                            Range of               Weighted Average
                                                    Shares               Exercise Prices            Exercise Price
                                                --------------         -------------------         -----------------
<S>                                               <C>                  <C>                            <C>    
Balance, January 1, 1994                           5,545,167           $  6.937 - $ 15.474            $  12.863
                                                  ----------           -------------------            ---------
Granted                                              660,400             15.688 -   17.250               15.697
Exercised or surrendered for SARs                   (496,240)            10.288 -   15.875               12.541
Recaptured or terminated                              (5,134)            13.563 -   15.688               14.887
                                                  ----------           -------------------            ---------
Balance, December 31, 1994                         5,704,193              6.937 -   17.250               13.217
                                                  ----------           -------------------            ---------   
Granted                                              926,400             18.250 -   19.438               18.254
Exercised or surrendered for SARs                 (1,014,328)             6.937 -   18.250               12.902
Recaptured or terminated                             (14,500)            12.875 -   18.250               15.750
                                                  ----------           -------------------            ---------
Balance, December 31, 1995                         5,601,765             10.288 -   19.438               14.101
                                                  ----------           -------------------            --------- 
Granted                                            2,408,600             22.656 -   25.313               25.274
Exercised or surrendered for SAR's                (1,174,244)            10.288 -   18.250               13.363
Recaptured or terminated                             (29,034)            15.688 -   25.313               22.069
                                                  ----------           -------------------            ---------      
Balance, December 31, 1996                         6,807,087             11.226 -   25.313               18.147
                                                  ==========           ===================            =========

</TABLE>
<PAGE>
     The number of options exercisable at December 31, 1996 was 3,577,553 shares
with a  weighted-average  exercise  price  of  $13.515,  compared  with  options
exercisable  of 4,009,931  shares at December 31, 1995 and  4,107,793  shares at
December 31, 1994 at  weighted-average  exercise  prices of $13.021 and $12.816,
respectively.  At December 31, 1996,  there were 2,860,844  shares available for
future  grants.  The following  table  summarizes  information  regarding  stock
options outstanding at December 31, 1996:
<TABLE>
<CAPTION>
                                          Options Outstanding                                  Options Exercisable
                         -----------------------------------------------------       -----------------------------------
                                       Weighted-Average
     Range of                           Remaining Life       Weighted-Average         Exercisable       Weighted-Average
  Exercise Prices         Shares          (in years)          Exercise Price            Shares           Exercise Price
-----------------       ---------      ----------------      -----------------       ------------       ----------------
<S>                      <C>                  <C>              <C>                      <C>                 <C>
$11.226-$16.313          3,563,087            4.9              $    13.339              3,343,953           $    13.185
$17.250-$25.313          3,244,000            9.1                   23.429                233,600                18.247
                         ---------            ---              -----------              ---------           -----------
Total Options            6,807,087            6.9              $    18.147              3,577,553           $    13.515
                         =========            ===              ===========              =========           ===========
</TABLE>
     SFAS No. 123,  "Accounting for Stock-Based  Compensation"  requires,  among
other items,  that the Company disclose either in the Consolidated  Statement of
Income or in the Notes to the Consolidated  Financial  Statements an estimate of
the cost of stock  options  granted to  employees.  The Company does not believe
that the granting of options at current market value to its employees represents
a cost to the  Company  and  that  estimates  of such  costs,  if any,  may vary
substantially  from any ultimate value  realized by the employees.  As a result,
the Company has  elected to  continue  to account for stock  options  granted to
employees under APB Opinion No. 25. However,  using the Black-Scholes  model and
the following assumptions, the estimated fair value of an option at the dates of
grant in 1996 and 1995 was $5.72 and $4.78, respectively.
<TABLE>
<CAPTION>
                                                     1996           1995
                                                    ------         ------
<S>                                                 <C>            <C>
Risk-free interest rate                              6.5%           6.9%
Expected dividend yield                              1.9%           1.9%
Expected volatility                                 16.7%          17.7%
Estimated lives of options (in years)                5.0            5.0
</TABLE>
     Based upon the above assumptions, the Company's proforma net income and per
share earnings would have been:
<TABLE>
<CAPTION>
                                                    1996           1995
                                                 --------       --------
<S>                                             <C>            <C>
Net income (in millions)                        $   136.6      $   132.9
Per share earnings (in dollars)                 $    1.28      $    1.25
</TABLE>
     Options  granted in 1996 and 1995 vest  equally each year over a three year
period. As a result,  the estimated costs indicated above reflect only a partial
vesting of such options and does not  consider  the  proforma  costs for options
granted  before 1995.  When fully vested,  the estimated  proforma  compensation
costs for each year would be higher than indicated above.
<PAGE>
     The Company granted 271,700,  98,900 and 110,200 restricted shares of stock
at a weighted-average fair value (at the dates of grant) of $25.247, $18.180 and
$15.527 in 1996, 1995 and 1994, respectively, to key members of management under
the Plan.  The Company  recognized  compensation  expense of $2.9 million,  $1.5
million and $0.8  million in 1996,  1995,  and 1994,  respectively,  relating to
these  grants.  At December 31, 1996,  there were 353,151  restricted  shares of
stock outstanding under the Plan.

9.   SHAREHOLDER RIGHTS PLAN AND SECOND PREFERRED STOCK

     In 1989,  the Company  adopted a  Shareholder  Rights  Plan and  declared a
dividend of one preferred share purchase right (a "Right") for each  outstanding
share of common stock,  without par value,  of the Company.  Each Right entitles
the registered  holder to purchase from the Company one one-hundredth of a share
of Junior Participating Second Preferred Stock (Series 1), without par value, of
the Company at a price of $120 per one  one-hundredth  of a share of such Second
Preferred Stock,  subject to adjustment.  The Rights will become  exercisable if
someone buys 15 percent or more of the Company's  common stock. In addition,  if
someone buys 15 percent or more of the Company's  common stock,  each right will
entitle its holder (other than that buyer) to purchase a number of shares of the
Company's  common stock having a market value of twice the Right's $120 exercise
price.  If the  Company is  acquired  in a merger,  each Right will  entitle its
holder to purchase a number of the  acquiring  company's  common shares having a
market value at the time of twice the Right's exercise price.
     Prior to the acquisition of 15 percent or more of the Company's  stock, the
Rights can be redeemed  by the Board of  Directors  for one cent per Right.  The
Company's  Board of Directors  also is  authorized to reduce the threshold to 10
percent or increase  it to not more than 20  percent.  The Rights will expire on
January 30, 1999.  The Rights do not have voting or dividend  rights,  and until
they become  exercisable,  have no dilutive effect on the per-share  earnings of
the Company.
     The Company has 10 million  authorized shares of Second Preferred Stock. In
January, 1989, the Company's Board of Directors designated 2.5 million shares of
the  Second  Preferred  Stock as Junior  Participating  Second  Preferred  Stock
(Series 1) in conjunction  with the Shareholder  Rights Plan. There is no Second
Preferred Stock issued or outstanding.

10.  SUPPLEMENTAL CASH FLOW INFORMATION

     Net cash provided by continuing  operations  reflects cash payments or cash
receipts as follows:
<TABLE>
<CAPTION>
(in millions)                             1996         1995         1994
                                       ---------    ---------    ---------
<S>                                    <C>          <C>          <C>
Interest paid                          $   70.5     $   78.9     $   61.0
Interest received                          (6.8)        (6.6)        (6.8)
Income taxes paid                         110.2         99.3        115.4
Income tax refunds                         (7.5)       (26.4)        (8.6)
</TABLE>

     There were no significant  acquisitions in either 1996 or 1994.  Details of
businesses acquired in purchase transactions in 1995 were as follows:
<PAGE>
<TABLE>
<CAPTION>
(in millions)                                                   1995
                                                             ---------
<S>                                                          <C>
Fair value of assets acquired                                $   85.4
Liabilities assumed                                             (13.0)
                                                             --------
Cost of acquisitions                                             72.4
Notes issued to sellers                                          (7.4)
Common stock issued to sellers                                   (2.7)
Cash and cash equivalents acquired                               (1.8)
                                                             --------
Net cash paid for acquisitions                               $   60.5
                                                             ========
</TABLE>
     The Company  acquired  several  companies  in 1995,  including a Pepsi-Cola
franchise in Cedar Rapids, Iowa, a Hussmann equipment  distributor in Chile, the
remaining 50 percent interest in a refrigeration manufacturer and distributor in
the United Kingdom, and 10 Midas muffler shops from a previous franchisee,  at a
total  cost of  $60.5  million.  All such  acquisitions  were  accounted  for as
purchases, and the operating results include such acquisitions from the dates of
purchase. The effects of these acquisitions, had they been made as of January 1,
1995, would not have been significant to operating results.
     In 1995, the Company issued 126,700 shares of its common stock with a value
of $2.7 million in  connection  with the  acquisition  of a group of Midas shops
from the former franchisee.  In February, 1996, the Company issued an additional
11,614 shares of its common stock in connection with this acquisition.
<PAGE>
11.  ENVIRONMENTAL AND OTHER CONTINGENCIES

     The  Company  is  subject  to  certain  indemnification  obligations  under
agreements  with  previously  sold  subsidiaries  for  potential   environmental
liabilities.  There is significant  uncertainty in assessing the Company's share
of the potential liability for such claims. The assessment and determination for
cleanup at the various sites involved is inherently speculative during the early
stages,  and the  Company's  share of such costs is subject to various  factors,
including possible insurance  recoveries and the allocation of liabilities among
many other potentially responsible and financially viable parties.
     Using the latest  evaluations from outside  advisors and  consultants,  the
Company believes that its potential  future  environmental  liabilities,  before
possible insurance recoveries, range from $25 million to $35 million or more. At
December  31,  1996,  the  Company  had $30.2  million  accrued  to cover  these
potential  liabilities.  During 1996,  the Company  recovered  $4.9 million from
insurance companies and other responsible parties related to these environmental
liabilities. Such recoveries were credited to the accruals for such liabilities.
     These  estimated  liabilities  include  expenses  for  the  remediation  of
identified  sites,  payments to third parties for claims and  expenses,  and the
expenses of on-going  evaluation  and  litigation.  The estimates are based upon
current   technology  and   remediation   techniques,   and  do  not  take  into
consideration any inflationary trends upon such claims or expenses,  nor do they
reflect the possible benefits of continuing improvements in remediation methods.
The accruals also do not provide for any claims for environmental liabilities or
other potential issues which may be filed against the Company in the future.
     The Company also has other  contingent  liabilities  from  various  pending
claims and litigation on a number of matters,  for which the ultimate  liability
for each claim, if any, cannot be determined. In the opinion of management,  and
based upon information  currently  available,  the ultimate  resolution of these
claims  and  litigation,   including  potential  environmental   exposures,  and
considering  amounts  already  accrued,  will not have a material  effect on the
Company's  financial  condition or the results of operations.  While  additional
claims and  liabilities  may  develop  and may result in  additional  charges to
income,  principally  through  discontinued  operations,  the  Company  does not
believe  that such  charges,  if any,  would  have a  material  effect  upon the
Company's financial condition or the results of operations.
<PAGE>
12.  SEGMENT REPORTING

     The Company is engaged in three distinct businesses: Pepsi-Cola soft drinks
and other  beverages;  Midas  automotive  services;  and Hussmann  refrigeration
systems and equipment.  Selected financial information related to these business
segments is shown below:
<TABLE>
<CAPTION>
                                                                                           Depreciation and
                   Sales and revenues      Operating income       Identifiable assets        amortization      Capital investments
              -------------------------- -------------------- -------------------------- -------------------  ---------------------
(in millions)    1996    1995     1994    1996   1995   1994    1996     1995      1994   1996   1995  1994    1996    1995   1994
              -------- -------- -------- ------ ------ ------ -------- -------- -------- ------ ------ -----  ------  ------ ------
<S>           <C>      <C>      <C>      <C>    <C>    <C>    <C>      <C>      <C>      <C>    <C>    <C>    <C>     <C>    <C>
Pepsi General $1,501.4 $1,448.7 $1,256.1 $212.3 $197.7 $185.5 $1,077.4 $1,034.9 $  892.8 $ 66.5 $ 60.0 $53.7  $ 86.9  $110.4 $ 66.0
Midas            604.2    576.1    543.2   78.0   82.5   75.2    484.6    440.8    406.9   20.3   18.1  16.4    30.7    34.3   28.7
Hussmann       1,005.7    921.7    859.5   93.8   78.7   82.5    611.4    540.1    492.0   20.2   19.6  17.3    33.5    29.3   32.7
Eliminations
and other           --      --       --      --     --     --    148.9    171.4    167.2    8.8   10.6  10.6     0.3     0.8     --
              -------- -------- -------- ------ ------ ------ -------- --------  ------- ------ ------ -----  ------  ------ ------
 Total before
 corporate
 administrative
 expenses     $3,111.3 $2,946.5 $2,658.8  384.1  358.9  343.2  2,322.3  2,187.2  1,958.9 $115.8 $108.3 $98.0  $151.4  $174.8 $127.4
              ======== ======== ========                                                 ====== ====== =====  ======  ====== ====== 
Corporate
administrative
expenses                                  (17.5) (16.6) (16.4)
                                         ------ ------ ------ 
Total operating income                    366.6  342.3  326.8
Interest expense, net                     (65.3) (68.2) (64.7)
Other expense, net/
corporate assets                          (25.6) (14.4) (49.4)    87.1    176.1    176.5
                                         ------ ------ ------ -------- -------- --------          
 Pretax income/
 total assets                            $275.7 $259.7 $212.7 $2,409.4 $2,363.3 $2,135.4
                                         ====== ====== ====== ======== ======== ========
</TABLE>
     Selected geographical information is presented below:
<TABLE>
<CAPTION>
                               Sales and revenues                Operating income                Identifiable assets
                         ------------------------------   ------------------------------  -------------------------------
(in millions)              1996       1995       1994       1996       1995       1994       1996       1995       1994
                         --------   --------   --------   --------   --------   --------  ---------  ---------  ---------
<S>                      <C>        <C>        <C>        <C>        <C>        <C>       <C>        <C>        <C>
United States            $2,623.5   $2,489.8   $2,236.3   $  368.0   $  345.4   $  312.2  $ 1,831.9  $ 1,783.3  $ 1,629.3
Foreign                     556.0      517.2      472.2       16.1       13.5       31.0      490.4      403.9      329.6
Eliminations                (68.2)     (60.5)     (49.7)        --         --         --         --         --         --
                         --------   --------   --------   --------   --------   --------  ---------  ---------  ---------
  Total before corporate
  expenses/assets        $3,111.3   $2,946.5   $2,658.8   $  384.1   $  358.9   $  343.2  $ 2,322.3  $ 2,187.2  $ 1,958.9
                         ========   ========   ========   ========   ========   ========  =========  =========  =========
</TABLE>
<PAGE>
     Equity  in net  income  (loss)  and net  assets  of the  Company's  foreign
operations amounted to $(1.5) million and $222.6 million, respectively, in 1996,
$5.2 million and $215.5 million in 1995, and $16.7 million and $180.8 million in
1994.
     Operating   income  is  exclusive  of  net  interest   expense,   corporate
administrative  expenses,  equity  in net  income  (loss) of  affiliates,  other
miscellaneous  income and expense items, and income taxes. Other expense, net in
1996 includes an $8.7 million charge,  principally  related to asset write-downs
at its joint venture soft drink operations in Poland. Other expense, net in 1994
includes  a  $24.2   million   unrealized   loss  on  investment  in  Northfield
Laboratories  Inc.  ("Northfield").  Foreign  currency  gains or losses were not
significant.  Sales between operating  segments and between  geographical  areas
were not  significant.  Export sales,  sales to any single customer and sales to
domestic or foreign  governments were each less than ten percent of consolidated
sales and revenues.
     Corporate assets are principally cash or cash equivalents, investments, and
miscellaneous other assets.

13.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>

                                                     First          Second          Third         Fourth         Full
(in millions, except per share data)                Quarter         Quarter        Quarter        Quarter        Year
                                                   ----------     ----------      ----------     ----------  ----------
<S>                                                <C>            <C>             <C>            <C>         <C>
1996:
-----
Sales                                              $   657.9      $   772.2       $  856.7       $   824.5   $  3,111.3
Gross profit                                           229.3          282.5          308.0           283.5      1,103.3
Net income                                              16.0           41.7           52.9            28.8        139.4
Net income per share                               $    0.15      $    0.39       $   0.50       $    0.27   $     1.31

1995:
-----
Sales                                              $   594.4      $   734.7       $  827.1       $   790.3   $  2,946.5
Gross profit                                           211.3          263.7          292.0           258.2      1,025.2
Net income                                              14.0           38.0           47.5            34.0        133.5
Net income per share                               $    0.13      $    0.36       $   0.45       $    0.32   $     1.26
</TABLE>
     In the fourth quarter of 1996, the Company  recorded an after-tax charge of
$8.7 million ($7.0 million after  minority  interest) in "other  expense,  net",
principally  related  to asset  write-downs  at its  joint  venture  soft  drink
operations in Poland.  The charge reduced net income per common share by $0.07 a
share for the fourth quarter and year ended December 31, 1996.               

<PAGE>
Whitman Corporation
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the years ended December 31                  1996         1995         1994         1993         1992         1991
(dollars in millions except per share)       ----------    ---------    ---------    ---------    ----------   -------
<S>                                          <C>           <C>          <C>          <C>          <C>          <C>
OPERATING RESULTS:
Sales and revenues:
   Pepsi General                             $  1,501.4    $ 1,448.7    $  1,256.1   $  1,179.6   $  1,111.2   $  1,121.9
   Midas                                          604.2        576.1         543.2        503.6        485.6        476.0
   Hussmann                                     1,005.7        921.7         859.5        846.5        791.2        795.4
                                             ----------    ---------    ----------   ----------   ----------   ----------
       Total                                 $  3,111.3    $ 2,946.5    $  2,658.8   $  2,529.7   $  2,388.0   $  2,393.3
                                             ==========    =========    ==========   ==========   ==========   ==========
Operating income:
   Pepsi General                             $    212.3    $   197.7    $    185.5   $    170.5   $    139.0   $    144.7
   Midas                                           78.0         82.5          75.2         67.1         73.1         76.4
   Hussmann                                        93.8         78.7          82.5         83.6         76.8         66.1
   Corporate administrative expenses              (17.5)       (16.6)        (16.4)       (15.9)       (14.5)       (15.4)
                                             ----------    ---------    ----------   ----------   ----------   ----------   
     Total operating income                       366.6        342.3         326.8        305.3        274.4        271.8
Interest expense, net                             (65.3)       (68.2)        (64.7)       (83.4)       (88.7)      (114.2)
Other income (expense), net                       (25.6)(A)    (14.4)        (49.4)(B)     (9.7)       (15.1)         4.1
                                             ----------    ---------    ----------   ----------   ----------   ----------
       Income before income taxes                 275.7        259.7         212.7        212.2        170.6        161.7
Income tax provisions                             117.2        107.4          88.1         90.7         68.5         70.3
Minority interest                                  19.1         18.8          18.2         15.1         10.0         11.0
                                             ----------    ---------    ----------   ----------   ----------   ----------
Income from continuing operations                 139.4        133.5         106.4        106.4         92.1         80.4
Income (loss) from discontinued operations           --           --          (3.2)          --        (32.3)        17.2
Extraordinary loss on early debt retirement          --           --            --         (4.2)          --           --
Cumulative effect of accounting change               --           --            --        (24.0)          --           --
                                             ----------    ---------    ----------   ----------   ----------   ----------
Net income                                   $    139.4    $   133.5    $    103.2   $     78.2   $     59.8   $     97.6
                                             ==========    =========    ==========   ==========   ==========   ==========
NET INCOME (LOSS) PER SHARE:
From continuing operations                   $     1.31    $    1.26    $     1.00   $     0.99   $     0.86   $     0.76
From discontinued operations                         --           --         (0.03)          --        (0.30)        0.16
Extraordinary loss on early debt retirement          --           --            --        (0.04)          --           --
Cumulative effect of accounting change               --           --            --        (0.22)          --           --
                                             ----------    ---------    ----------   ----------   ----------   ----------
       Net income                            $     1.31    $    1.26    $     0.97   $     0.73   $     0.56   $     0.92
                                             ==========    =========    ==========   ==========   ==========   ==========
Average shares (in millions)                      106.4        106.2         106.2        107.5        107.2        105.9
                                             ==========    =========    ==========   ==========   ==========   ==========
Cash dividends per common share              $     0.41    $    0.37    $     0.33   $     0.29   $    0.255   $    0.445
                                             ==========    =========    ==========   ==========   ==========   ==========
OTHER STATISTICS:
Total assets                                 $  2,409.4    $ 2,363.3    $  2,135.4   $  2,103.2   $  2,062.8   $  2,123.0
Long-term debt                               $    837.5    $   828.2    $    723.0   $    749.3   $    791.8   $    895.9
Capital investments                          $    151.4    $   174.8    $    127.4   $     88.7   $     79.2   $     79.2
Depreciation and amortization                $    115.8    $   108.3    $     98.0   $     95.5   $     93.5   $     86.6
Number of employees at December 31               17,594       16,841        15,271       14,868       14,374       14,703
</TABLE>
(A)  Includes an $8.7 million charge, principally for asset write-downs at the
     joint  venture  soft  drink  operations  in Poland.  The  charge  reduced
     minority interest by $1.7 million.
(B)  Includes a $24.2 million unrealized loss on investment in Northfield.



                                                           

<PAGE>










                      WHITMAN CORPORATION AND SUBSIDIARIES



                             ----------------------

                                    EXHIBITS


                   FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K

                       FISCAL YEAR ENDED DECEMBER 31, 1996


                                      
<PAGE>
                                  EXHIBIT INDEX

Exhibit
   No.     Description of Exhibit

(3)a#      Certificate of Incorporation as Restated April 30, 1987, and 
           subsequently amended through June 24, 1992.
(3)b+      By-Laws, as amended September 20, 1996.
(4)#       Indenture dated as of January 15, 1993, between Whitman Corporation 
             and The First National Bank of Chicago, Trustee.  The Registrant 
             will furnish to the Securities and Exchange  Commission, upon 
             request, copies of the forms of the debt securities  issued from 
             time to time pursuant to the Indenture dated as of January 15, 
             1993.
(10)a#     **1982 Stock Option, Restricted Stock Award and Performance Award 
             Plan (as amended through June 16,
              1989).
(10)b#     **Amendment No. 2 to 1982 Stock Option, Restricted Stock Award and 
             Performance Award Plan made as of September 1, 1992.
(10)c#     **Form of Nonqualified Stock Option Agreement.
(10)d#     **Amendment to 1982 Stock Option, Stock Award and Performance Award 
             Plan made as of February 19, 1993.
(10)e@     **Form of Change in Control Agreement dated November 17, 1995.
(10)g#     **Management Incentive Compensation Plan.
(10)h#     **Long Term Performance Compensation Program.
(10)i&     **Whitman Corporation Executive Retirement Plan, as Amended and
             Restated Effective January 1, 1995.
(10)j&     **Hussmann Corporation Executive Retirement Plan, as Amended and 
             Restated Effective January 1, 1995.
(10)k&     **Midas International Corporation Executive Retirement Plan, as 
             Amended and Restated Effective January 1, 1995.
(10)l&     **Pepsi-Cola General Bottlers, Inc. Executive Retirement Plan, as 
             Amended and Restated Effective January 1, 1995.
(10)m#     **Deferred Compensation Plan for Directors, as Amended November 18, 
             1988.
(10)n+     **Amendment to Stock Incentive Plan dated September 20, 1996.
(10)o*     **Form of Restricted Stock Award Agreement.
(12)       Statement of Calculation of Ratio of Earnings to Fixed Charges.
(21)       Subsidiaries of the Registrant.
(23)       Consent of Independent Auditors.
(24)       Powers of Attorney.
(27)       Financial Data Schedule.

Exhibit Reference Explanations
**   Exhibit constitutes a management contract or compensatory plan, contract or
     arrangement described under Item 601(b) (10) (iii) (A) of Regulation S-K.
#    Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the year ended December 31, 1992 under the indicated Exhibit number.
*    Incorporated by reference to the Registrant's Annual Report on Form 10-K 
     for the year ended December 31, 1993 under the indicated Exhibit number.
&    Incorporated by reference to the Registrant's Annual Report on Form 10-K 
     for the year ended December 31, 1994 under the indicated Exhibit number.
@    Incorporated by reference to the Registrant's Annual Report on Form 10-K 
     for the year ended December 31, 1995 under the indicated Exhibit number.
+    Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the  quarter  ended  September 30, 1996 under the  indicated  Exhibit
     number.